Summit Midstream Partners, LP Reports Third Quarter 2023 Financial and Operating Results

HOUSTON, Nov. 3, 2023 /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, 2023.

Highlights

Third quarter 2023 net income of $3.9 million, adjusted EBITDA of $72.8 million, cash flow available for distributions (“Distributable Cash Flow” or “DCF”) of $38.5 million and free cash flow (“FCF”) of $21.9 million
Adjusted EBITDA of $72.8 million represents ~24% quarter-over-quarter growth and ~$290 million run-rate
Connected 77 wells during the third quarter, resulting in 227 wells connected year-to-date and remain on pace to connect a total of ~300 wells by the end 2023
Reiterating fourth quarter Adjusted EBITDA guidance of $75 million to $85 million
Active customer base with six drilling rigs and more than 165 DUCs behind our systems
Executed 15-year contract extension dedicating more than 30,000 leased acres with a key customer in the Williston
Constructing initial phase of compression project to provide low-pressure service on the Summit Midstream Utica (“SMU”) system
Launched strategic alternatives review with the goal of maximizing unitholder value

Management Commentary

Heath Deneke, President, Chief Executive Officer, and Chairman, commented, “Summit delivered solid third quarter 2023 financial and operating results that include a significant quarter-over-quarter increase in Adjusted EBITDA and operational progress that supports our projection of achieving approximately $300 million of LTM Adjusted EBITDA by mid-2024. As we look ahead, activity levels behind our systems remain strong with more than 220 new wells scheduled to be turned in line from the fourth quarter of 2023 through the first half of 2024.

We had some solid commercial wins during the quarter, including a long-term contract extension in the Williston Basin of more than 30,000 contiguous and largely undeveloped acreage in Williams County. With this contract extension, we expect our customer to begin a one-rig development program in mid-2024. In addition, we announced that we are constructing the initial phase of a broader centralized compression project to add low-pressure service to our SMU system. We expect this first phase to be in-service by year-end, which will result in an incremental compression fee on approximately 20 MMcf/d beginning in the first quarter of 2024. We continue to work with our customer on the timing of adding compression to the rest of the system.

As previously announced, our Board of Directors launched a strategic alternatives review with the goal of maximizing unitholder value.  These alternatives may include, but are not limited to, continued execution of the Partnership’s business plan, sale of assets, refinancing parts or the entirety of its capital structure, sale of the Partnership by merger or cash, or any combination of these and other alternatives. We are very pleased with the continued level of interest from third parties for potential transactions‎, ranging from the sale of specific assets to consideration for the entire Partnership.

While the Board conducts its review, the Partnership remains focused on its operational performance and execution of its business strategy to increase unitholder value.”

Business Highlights

SMLP’s average daily natural gas throughput for its wholly owned operated systems increased 12% to 1,352 MMcf/d, and liquids volumes increased 20% to 85 Mbbl/d, relative to the second quarter of 2023. OGC natural gas throughput increased from 781 MMcf/d to 870 MMcf/d, an 11% increase quarter-over-quarter, and generated $11.9 million of adjusted EBITDA, net to SMLP, for the third quarter of 2023. Double E Pipeline gross volumes transported increased from 243 MMcf/d to 327 MMcf/d, a 34% increase quarter-over-quarter, and generated $5.9 million of adjusted EBITDA, net to SMLP, for the third quarter of 2023.

Natural gas price-driven segments:

Natural gas price-driven segments had combined quarterly segment adjusted EBITDA of $49.1 million, representing 17.4% sequential growth, and combined capital expenditures of $3.1 million in the third quarter of 2023.
Northeast segment adjusted EBITDA totaled $27.8 million, an increase of $7.6 million from the second quarter 2023, primarily due to a 19.6% increase in volume on our wholly owned systems and an 11% increase in volume from our OGC joint venture. During the third quarter, 14 new wells were brought online behind our wholly owned Summit Midstream Utica (“SMU”) system and eight new wells were connected behind our OGC joint venture. The 14 new wells behind our SMU system were brought online throughout the third quarter. As such, current operated volumes are trending approximately 60 MMcf/d higher than third quarter volumes. We began constructing the initial phase of a centralized compression project behind the SMU system with an expected year-end in-service date. This project adds compression to approximately 20 MMcf/d of volume, resulting in an incremental compression fee beginning in the first quarter of 2024. We continue to evaluate the timing of adding compression on the rest of the system with our key customer. We expect 11 new wells to be connected during the fourth quarter, all of which have already been connected. There is currently two rigs running and 14 DUCs behind our systems.
Piceance segment adjusted EBITDA totaled $15.3 million, an increase of $0.9 million from the second quarter of 2023, primarily due to a 5.4% increase in volume throughput driven by 12 wells brought online during the quarter, partially offset by natural production declines. We expect approximately 20 new wells to be connected during the fourth quarter, of which eight have already been connected. There are currently 13 DUCs behind the system.
Barnett segment adjusted EBITDA totaled $6.1 million, a decrease of $1.2 million relative to the second quarter of 2023, primarily due to approximately $1.8 million in other revenue recognized during the second quarter. Volumes decreased 6.6%, primarily due to the continuation of production being temporarily shut-in by one of our customers. We estimate these curtailments impacted segment volumes by approximately 20 MMcf/d during the quarter. Our anchor customer completed six new wells in September that have increased segment volumes to approximately 190 MMcf/d currently. While we do not expect any new wells during the fourth quarter, our anchor customer is expected to bring online 15 to 20 new wells during the first half of 2024. There is currently one rig running and 21 DUCs behind the system.

Oil price-driven segments

Oil price-driven segments generated $30.8 million of combined segment adjusted EBITDA, representing 38.8% sequential growth, and had combined capital expenditures of $13.7 million.
Permian segment adjusted EBITDA totaled $5.8 million, an increase of $0.5 million from the second quarter of 2023, primarily due to an increase in proportionate EBITDA from our Double E joint venture.
Rockies segment adjusted EBITDA totaled $25.0 million, an increase of $8.2 million relative to the second quarter of 2023, primarily due to a 19.7% increase in liquids volume throughput, an 18.2% increase in natural gas volume throughput and higher realized commodity prices. There were 37 new wells connected during the quarter, including six in the DJ Basin and 31 in the Williston Basin. We expect more than 50 new wells to be connected during the fourth quarter, including more than 40 new wells in the DJ Basin that are expected to reach peak production in the second quarter of 2024. We executed a 15-year contract extension with a key customer in the Williston Basin, which includes more than 30,000 dedicated leased acres in southern Williams County. We expect this customer to begin a one-rig development program in mid-2024. In addition, one of our anchor customers in the Williston announced the acquisition of our other anchor customer during the quarter. While integration has historically delayed development for a few months, we are excited about the highly contiguous pro forma dedicated acreage position. We expect this will enable our anchor customer to develop more three-mile laterals to its historic two-mile laterals. There are currently three rigs running and approximately 117 DUCs behind the systems.

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

Three Months Ended

September 30,

Nine Months Ended

September 30,

2023

2022

2023

2022

Average daily throughput (MMcf/d):

Northeast (1)

752

637

658

670

Rockies

117

31

108

30

Permian (1)

18

Piceance

313

305

299

310

Barnett

170

204

184

200

Aggregate average daily throughput

1,352

1,177

1,249

1,228

Average daily throughput (Mbbl/d):

Rockies

85

66

76

62

Aggregate average daily throughput

85

66

76

62

Ohio Gathering average daily throughput (MMcf/d) (2)

870

783

763

648

Double E average daily throughput (MMcf/d) (3)

327

314

278

272

_________

(1)

Exclusive of Ohio Gathering and Double E due to equity method accounting.

(2)

Gross basis, represents 100% of volume throughput for Ohio Gathering, subject to a one-month lag.

(3)

Gross basis, represents 100% of volume throughput for Double E.

The following table presents adjusted EBITDA by reportable segment for the periods indicated:

Three Months Ended

September 30,

Nine Months Ended

September 30,

2023

2022

2023

2022

(In thousands)

(In thousands)

Reportable segment adjusted EBITDA (1):

Northeast (2)

$         27,751

$         19,353

$         65,806

$         57,989

Rockies

24,998

14,262

64,986

43,991

Permian (3)

5,840

4,882

16,283

13,848

Piceance

15,292

14,249

43,640

45,367

Barnett

6,084

7,864

20,380

24,397

Total

$         79,965

$         60,610

$       211,095

$       185,592

Less:  Corporate and Other (4)

7,175

5,868

19,267

23,630

Adjusted EBITDA

$         72,790

$         54,742

$       191,828

$       161,962

__________

(1)

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

(2)

Includes our proportional share of adjusted EBITDA for Ohio Gathering, subject to a one-month lag. We define proportional adjusted EBITDA for our equity method investees as the product of (i) total revenues less total expenses, excluding impairments and other noncash income or expense items and (ii) amortization for deferred contract costs; multiplied by our ownership interest during the respective period.

(3)

Includes our proportional share of adjusted EBITDA for Double E. We define proportional adjusted EBITDA for our equity method investees as the product of total revenues less total expenses, excluding impairments and other noncash income or expense items; multiplied by our ownership interest during the respective period.

(4)

Corporate and Other represents those results that are not specifically attributable to a reportable segment or that have not been allocated to our reportable segments, including certain general and administrative expense items and transaction costs.

Capital Expenditures

Capital expenditures totaled $17.7 million in the third quarter of 2023, inclusive of maintenance capital expenditures of $2.8 million. Capital expenditures in the third quarter of 2023 were primarily related to pad connections and DJ Basin integration projects in the Rockies segment.

Nine Months Ended September 30,

2023

2022

(In thousands)

Cash paid for capital expenditures (1):

Northeast

$           2,502

$           7,520

Rockies

40,089

6,204

Permian

1,406

Piceance

3,910

4,350

Barnett

109

248

Total reportable segment capital expenditures

$         46,610

$         19,728

Corporate and Other

3,253

1,227

Total cash paid for capital expenditures

$         49,863

$         20,955

__________

(1)

Excludes cash paid for capital expenditures by Ohio Gathering and Double E due to equity method accounting.

Capital & Liquidity

As of September 30, 2023, SMLP had $17.1 million in unrestricted cash on hand and $295 million drawn under its $400 million ABL Revolver and $100.7 million of borrowing availability, after accounting for $4.3 million of issued, but undrawn, letters of credit. As of September 30, 2023, SMLP’s gross availability based on the borrowing base calculation in the credit agreement was $715 million, which is $315 million greater than the $400 million of lender commitments to the ABL Revolver. As of September 30, 2023, SMLP was in compliance with all financial covenants, including interest coverage of 2.2x relative to a minimum interest coverage covenant of 2.0x and first lien leverage ratio of 1.2x relative to a maximum first lien leverage ratio of 2.5x. As of September 30, 2023, SMLP reported a total leverage ratio of approximately 5.5x.

As of September 30, 2023, the Permian Transmission Credit Facility balance was $147.5 million, a reduction of $2.7 million relative to the June 30, 2023 balance of $150.2 million due to scheduled mandatory amortization. The Permian Transmission Term Loan remains non-recourse to SMLP.

MVC Shortfall Payments

SMLP billed its customers $7.2 million in the third quarter of 2023 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 2023, SMLP recognized $7.2 million of gathering revenue associated with MVC shortfall payments. SMLP had no adjustments to MVC shortfall payments in the third quarter of 2023. SMLP’s MVC shortfall payment mechanisms contributed $7.2 million of total adjusted EBITDA in the third quarter of 2023.

Three Months Ended September 30, 2023

MVC Billings

Gathering
revenue

Adjustments
to MVC
shortfall
payments

Net impact to
adjusted
EBITDA

(In thousands)

Net change in deferred revenue related to MVC

   shortfall payments:

Piceance Basin

$             —

$             —

$            —

$            —

Total net change

$             —

$             —

$            —

$            —

MVC shortfall payment adjustments:

Rockies

$            84

$            84

$            —

$           84

Piceance

5,499

5,499

5,499

Northeast

1,637

1,637

1,637

Total MVC shortfall payment adjustments

$        7,220

$        7,220

$            —

$       7,220

Total (1)

$        7,220

$        7,220

$            —

$       7,220

__________

(1)

Exclusive of Ohio Gathering and Double E due to equity method accounting.

Nine Months Ended September 30, 2023

MVC Billings

Gathering
revenue

Adjustments
to MVC
shortfall
payments

Net impact to
adjusted
EBITDA

(In thousands)

Net change in deferred revenue related to MVC

   shortfall payments:

Piceance Basin

$             —

$             —

$            —

$            —

Total net change

$             —

$             —

$            —

$            —

MVC shortfall payment adjustments:

Rockies

$          138

$          138

$            —

$         138

Piceance

16,435

16,435

16,435

Northeast

4,925

4,925

4,925

Total MVC shortfall payment adjustments

$      21,498

$      21,498

$            —

$     21,498

Total (1)

$      21,498

$      21,498

$            —

$     21,498

__________

(1)

Exclusive of Ohio Gathering and Double E due to equity method accounting.

Quarterly Distribution

The Board of Directors of SMLP’s general partner continued to suspend cash distributions payable on its common units and on its Series A fixed-to-floating rate cumulative redeemable perpetual preferred units (the “Series A Preferred Units”) for the period ended September 30, 2023. Unpaid distributions on the Series A Preferred Units will continue to accumulate.

Third Quarter 2023 Earnings Call Information

SMLP will host a conference call at 10:00 a.m. Eastern on November 3, 2023, to discuss its quarterly operating and financial results. The call can be accessed via teleconference at: Q3 2023 Summit Midstream Partners LP Earnings Conference Call (https://register.vevent.com/register/BIc42a8b051b4d40e8902304edf61e8ef7). Once registration is completed, participants will receive a dial-in number along with a personalized PIN to access the call. While not required, it is recommended that participants join 10 minutes prior to the event start. The conference call, live webcast and archive of the call can be accessed through the Investors section of SMLP’s website at www.summitmidstream.com

Upcoming Investor Conference

Members of SMLP’s senior management team will attend the 2023 Bank of America Leverage Finance Conference taking place on November 28–29, 2023 and the 2023 Wells Fargo Midstream and Utilities Symposium taking place on December 6–7, 2023. The 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 the conference.

Use of Non-GAAP Financial Measures

We report financial results in accordance with U.S. generally accepted accounting principles (“GAAP”). We also present adjusted EBITDA, Distributable Cash Flow, and Free Cash Flow, non-GAAP financial measures.

Adjusted EBITDA

We define adjusted EBITDA as net income or loss, plus interest expense, income tax expense, depreciation and amortization, our proportional adjusted EBITDA for equity method investees, adjustments related to MVC shortfall payments, adjustments related to capital reimbursement activity, unit-based and noncash compensation, impairments, items of income or loss that we characterize as unrepresentative of our ongoing operations and other noncash expenses or losses, income tax benefit, income (loss) from equity method investees and other noncash income or gains. Because adjusted EBITDA may be defined differently by other entities in our industry, our definition of this non-GAAP financial measure may not be comparable to similarly titled measures of other entities, thereby diminishing its utility.

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

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

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

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

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

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

Distributable Cash Flow

We define Distributable Cash Flow as adjusted EBITDA, as defined above, less cash interest paid, cash paid for taxes, net interest expense accrued and paid on the senior notes, and maintenance capital expenditures.

Free Cash Flow

We define free cash flow as distributable cash flow attributable to common and preferred unitholders less growth capital expenditures, less investments in equity method investees, less distributions to common and preferred unitholders. Free cash flow excludes proceeds from asset sales and cash consideration paid for acquisitions. 

We do not provide the GAAP financial measures of net income or loss or net cash provided by operating activities on a forward-looking basis because we are unable to predict, without unreasonable effort, certain components thereof including, but not limited to, (i) income or loss from equity method investees and (ii) asset impairments. These items are inherently uncertain and depend on various factors, many of which are beyond our control. As such, any associated estimate and its impact on our GAAP performance and cash flow measures could vary materially based on a variety of acceptable management assumptions.

About Summit Midstream Partners, LP

SMLP is a value-driven limited partnership focused on developing, owning and operating midstream energy infrastructure assets that are strategically located in the core producing areas of unconventional resource basins, primarily shale formations, in the continental United States. SMLP provides natural gas, crude oil and produced water gathering, processing and transportation services pursuant to primarily long-term, fee-based agreements with customers and counterparties in five unconventional resource basins: (i) the Appalachian Basin, which includes the Utica and Marcellus shale formations in Ohio and West Virginia; (ii) the Williston Basin, which includes the Bakken and Three Forks shale formations in North Dakota; (iii) the Denver-Julesburg Basin, which includes the Niobrara and Codell shale formations in Colorado and Wyoming; (iv) the Fort Worth Basin, which includes the Barnett Shale formation in Texas; and (v) the Piceance Basin, which includes the Mesaverde formation as well as the Mancos and Niobrara shale formations in Colorado. SMLP has an equity method investment in Double E Pipeline, LLC, which provides interstate natural gas transportation service from multiple receipt points in the Delaware Basin to various delivery points in and around the Waha Hub in Texas. SMLP also has an equity method investment in Ohio Gathering, which operates extensive natural gas gathering and condensate stabilization infrastructure in the Utica Shale in Ohio. SMLP is headquartered in Houston, Texas.

Forward-Looking Statements

This press release includes certain statements concerning expectations for the future that are forward-looking within the meaning of the federal securities laws. Forward-looking statements include, without limitation, any statement that may project, indicate or imply future results, events, performance or achievements and may contain the words “expect,” “intend,” “plan,” “anticipate,” “estimate,” “believe,” “will be,” “will continue,” “will likely result,” and similar expressions, or future conditional verbs such as “may,” “will,” “should,” “would,” and “could”, including the estimated closing date of the acquisitions, sources and uses of funding, the benefits of the acquisitions to us and any related opportunities. In addition, any statement concerning future financial performance (including future revenues, earnings or growth rates), ongoing business strategies and possible actions taken by us or our subsidiaries are also forward-looking statements. Forward-looking statements also contain known and unknown risks and uncertainties (many of which are difficult to predict and beyond management’s control) that may cause SMLP’s actual results in future periods to differ materially from anticipated or projected results. An extensive list of specific material risks and uncertainties affecting SMLP is contained in its 2022 Annual Report on Form 10-K filed with the Securities and Exchange Commission (the “SEC”) on March 1, 2023, 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 SUBSIDIARIESUNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS

September 30,
2023

December 31,
2022

(In thousands)

ASSETS

Cash and cash equivalents

$        17,097

$        11,808

Restricted cash

1,798

1,723

Accounts receivable

78,915

75,287

Other current assets

3,159

8,724

Total current assets

100,969

97,542

Property, plant and equipment, net

1,695,459

1,718,754

Intangible assets, net

182,195

198,718

Investment in equity method investees

491,747

506,677

Other noncurrent assets

39,144

38,273

TOTAL ASSETS

$   2,509,514

$   2,559,964

LIABILITIES AND CAPITAL

Trade accounts payable

$        15,496

$        14,052

Accrued expenses

31,542

20,601

Deferred revenue

11,262

9,054

Ad valorem taxes payable

7,969

10,245

Accrued compensation and employee benefits

5,269

16,319

Accrued interest

39,468

17,355

Accrued environmental remediation

1,365

1,365

Accrued settlement payable

6,659

6,667

Current portion of long-term debt

14,258

10,507

Other current liabilities

9,313

11,724

Total current liabilities

142,601

117,889

Long-term debt, net of issuance costs

1,440,832

1,479,855

Noncurrent deferred revenue

31,280

37,694

Noncurrent accrued environmental remediation

1,701

2,340

Other noncurrent liabilities

34,546

38,784

TOTAL LIABILITIES

1,650,960

1,676,562

Commitments and contingencies

Mezzanine Capital

Subsidiary Series A Preferred Units

122,564

118,584

Partners’ Capital

Series A Preferred Units

93,769

85,327

Common limited partner capital

642,221

679,491

Total partners’ capital

735,990

764,818

TOTAL LIABILITIES AND CAPITAL

$   2,509,514

$   2,559,964

SUMMIT MIDSTREAM PARTNERS, LP AND SUBSIDIARIESUNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

Three Months Ended September 30,

Nine Months Ended September 30,

2023

2022

2023

2022

(In thousands, except per-unit amounts)

Revenues:

Gathering services and related fees

$     66,035

$     61,814

$   180,492

$   187,465

Natural gas, NGLs and condensate sales

45,120

16,628

130,365

67,364

Other revenues

10,038

10,240

20,728

29,042

Total revenues

121,193

88,682

331,585

283,871

Costs and expenses:

Cost of natural gas and NGLs

27,110

15,080

77,967

64,162

Operation and maintenance

26,161

21,877

75,291

61,216

General and administrative

11,098

8,550

31,897

31,983

Depreciation and amortization

30,778

28,841

90,734

89,397

Transaction costs

144

1,517

926

1,750

Acquisition integration costs

171

2,396

Gain on asset sales, net

(40)

(99)

(183)

(409)

Long-lived asset impairments

7,016

455

91,644

Total costs and expenses

95,422

82,782

279,483

339,743

Other income (expense), net

(315)

747

(4)

Gain on interest rate swaps

2,856

5,527

4,851

16,491

Loss on sale of business

(9)

(85)

(45)

(85)

Interest expense

(34,568)

(24,932)

(103,966)

(73,982)

Loss before income taxes and equity method
investment income

(6,265)

(13,590)

(46,311)

(113,452)

Income tax benefit (expense)

(72)

68

180

(307)

Income from equity method investees

10,211

5,734

22,302

14,162

Net income (loss)

$       3,874

$      (7,788)

$    (23,829)

$    (99,597)

Net loss per limited partner unit:

Common unit – basic

$       (0.27)

$       (1.28)

$       (3.99)

$       (9.68)

Common unit – diluted

$       (0.27)

$       (1.28)

$       (3.99)

$       (9.68)

Weighted-average limited partner units outstanding:

Common units – basic

10,376

10,168

10,320

10,003

Common units – diluted

10,376

10,168

10,320

10,003

SUMMIT MIDSTREAM PARTNERS, LP AND SUBSIDIARIESUNAUDITED OTHER FINANCIAL AND OPERATING DATA

Three Months Ended September 30,

Nine Months Ended September 30,

2023

2022

2023

2022

(In thousands)

Other financial data:

Net income (loss)

$       3,874

$      (7,788)

$    (23,829)

$    (99,597)

Net cash provided by operating activities

59,119

36,646

110,759

96,805

Capital expenditures

17,685

6,161

49,863

20,955

Contributions to equity method investees

3,500

8,444

Adjusted EBITDA

72,790

54,742

191,828

161,962

Cash flow available for distributions (1)

38,478

29,766

87,786

87,145

Free Cash Flow

21,922

24,295

38,606

63,279

Distributions (2)

n/a

n/a

n/a

n/a

Operating data:

Aggregate average daily throughput – natural gas (MMcf/d)

1,352

1,177

1,249

1,228

Aggregate average daily throughput – liquids (Mbbl/d)

85

66

76

62

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

870

783

763

648

Double E average daily throughput (MMcf/d) (4)

327

314

278

251

__________

(1)

Cash flow available for distributions is also referred to as Distributable Cash Flow, or DCF.

(2)

Represents distributions declared and ultimately paid or expected to be paid to preferred and common unitholders in respect of a given period. On May 3, 2020, the board of directors of SMLP’s general partner announced an immediate suspension of the cash distributions payable on its preferred and common units. Excludes distributions paid on the Subsidiary Series A Preferred Units issued at Summit Permian Transmission Holdco, LLC.

(3)

Gross basis, represents 100% of volume throughput for Ohio Gathering, subject to a one-month lag.

(4)

Gross basis, represents 100% of volume throughput for Double E.

SUMMIT MIDSTREAM PARTNERS, LP AND SUBSIDIARIESUNAUDITED RECONCILIATIONS TO NON-GAAP FINANCIAL MEASURES

Three Months Ended September 30,

Nine Months Ended September 30,

2023

2022

2023

2022

(In thousands)

Reconciliations of net income to adjusted EBITDA and
Distributable

    Cash Flow:

Net income (loss)

$       3,874

$      (7,788)

$    (23,829)

$    (99,597)

Add:

Interest expense

34,568

24,932

103,966

73,982

Income tax expense (benefit)

72

(68)

(180)

307

Depreciation and amortization (1)

31,013

29,076

91,438

90,101

Proportional adjusted EBITDA for equity method
investees (2)

16,917

11,949

42,655

33,807

Adjustments related to capital reimbursement activity (3)

(3,111)

(1,517)

(6,778)

(4,823)

Unit-based and noncash compensation

1,396

692

5,158

2,964

Gain on asset sales, net

(40)

(99)

(183)

(409)

Long-lived asset impairment

7,016

455

91,644

Gain on interest rate swaps

(2,856)

(5,527)

(4,851)

(16,491)

Other, net (4)

1,168

1,810

6,279

4,639

Less:

Income from equity method investees

10,211

5,734

22,302

14,162

Adjusted EBITDA

$     72,790

$     54,742

$   191,828

$   161,962

Less:

Cash interest paid

10,162

4,054

72,749

46,093

Cash paid for taxes

15

149

Senior notes interest adjustment (5)

21,392

18,604

22,210

21,414

Maintenance capital expenditures

2,758

2,318

9,068

7,161

Cash flow available for distributions (6)

$     38,478

$     29,766

$     87,786

$     87,145

Less:

Growth capital expenditures

14,927

3,843

40,795

13,794

Investment in equity method investee

3,500

8,444

Distributions on Subsidiary Series A Preferred Units

1,629

1,628

4,885

1,628

Free Cash Flow

$     21,922

$     24,295

$     38,606

$     63,279

__________

(1)

Includes the amortization expense associated with our favorable gas gathering contracts as reported in other revenues.

(2)

Reflects our proportionate share of Double E and Ohio Gathering (subject to a one-month lag) adjusted EBITDA.

(3)

Adjustments related to capital reimbursement activity represent contributions in aid of construction revenue recognized in accordance with Accounting Standards Update No. 2014-09 Revenue from Contracts with Customers (“Topic 606”).

(4)

Represents items of income or loss that we characterize as unrepresentative of our ongoing operations. For the nine months ended September 30, 2023, the amount includes $2.4 million of integration costs, $2.7 million of transaction and other costs and $1.6 million of severance expense. For the nine months ended September 30, 2022, the amount includes $2.5 million of severance expenses.

(5)

Senior notes interest adjustment represents the net of interest expense accrued and paid during the period. Interest on the 2025 senior notes is paid in cash semi-annually in arrears on April 15 and October 15 until maturity in April 2025. Interest on the 2026 senior notes is paid in cash semi-annually in arrears on April 15 and October 15 until maturity in October 2026.

(6)

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

SUMMIT MIDSTREAM PARTNERS, LP AND SUBSIDIARIESUNAUDITED RECONCILIATIONS TO NON-GAAP FINANCIAL MEASURES

Nine Months Ended September 30,

2023

2022

(In thousands)

Reconciliation of net cash provided by operating activities to adjusted

    EBITDA and distributable cash flow:

Net cash provided by operating activities

$      110,759

$       96,805

Add:

Interest expense, excluding amortization of debt issuance costs

94,473

67,340

Income tax expense (benefit)

(180)

307

Changes in operating assets and liabilities

(6,685)

(3,968)

Proportional adjusted EBITDA for equity method investees (1)

42,655

33,807

Adjustments related to capital reimbursement activity (2)

(6,778)

(4,823)

Realized (gain) loss on swaps

(3,777)

379

Other, net (3)

5,897

4,554

Less:

Distributions from equity method investees

40,732

31,764

Noncash lease expense

3,804

675

Adjusted EBITDA

$      191,828

$      161,962

Less:

Cash interest paid

72,749

46,093

Cash paid for taxes

15

149

Senior notes interest adjustment (4)

22,210

21,414

Maintenance capital expenditures

9,068

7,161

Cash flow available for distributions (5)

$       87,786

$       87,145

Less:

Growth capital expenditures

40,795

13,794

Investment in equity method investee

3,500

8,444

Distributions on Subsidiary Series A Preferred Units

4,885

1,628

Free Cash Flow

$       38,606

$       63,279

__________

(1)

Reflects our proportionate share of Double E and Ohio Gathering adjusted EBITDA, subject to a one-month lag.

(2)

Adjustments related to capital reimbursement activity represent contributions in aid of construction revenue recognized in accordance with Accounting Standards Update No. 2014-09 Revenue from Contracts with Customers (“Topic 606”).

(3)

Represents items of income or loss that we characterize as unrepresentative of our ongoing operations. For the nine months ended September 30, 2023, the amount includes $2.4 million of integration costs, $2.7 million of transaction and other costs and $1.6 million of severance expenses. For the nine months ended September 30, 2022, the amount includes $2.5 million of severance expenses and $1.8 million of transaction costs.

(4)

Senior notes interest adjustment represents the net of interest expense accrued and paid during the period. Interest on the 2025 senior notes is paid in cash semi-annually in arrears on April 15 and October 15 until maturity in April 2025. Interest on the 2026 senior notes is paid in cash semi-annually in arrears on April 15 and October 15 until maturity in October 2026.

(5)

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

SOURCE Summit Midstream Partners, LP


Go to Source