Summit Midstream Partners, LP Reports Fourth Quarter and Full-Year 2023 Financial and Operating Results, 2024 Guidance and Strategic Alternatives Update

HOUSTON, March 15, 2024 /PRNewswire/ — Summit Midstream Partners, LP (NYSE: SMLP) (“Summit”, “SMLP” or the “Partnership”) announced today its financial and operating results for fourth quarter and full-year 2023, provided full-year 2024 financial guidance and updated its strategic alternatives review.

Highlights

Previously announced strategic alternatives review entering advance stages
Fourth quarter 2023 net loss of $15.1 million, adjusted EBITDA of $75.0 million, cash flow available for distributions (“Distributable Cash Flow” or “DCF”) of $37.8 million and free cash flow (“FCF”) of $20.4 million
Reported 2023 Adjusted EBITDA of $267 million and fourth quarter Adjusted EBITDA run-rate of $300 million
Connected 77 wells during the fourth quarter, resulting in 304 wells connected in 2023
Active customer base with five drilling rigs and more than 140 DUCs behind our systems
Commissioned DJ Basin de-bottlenecking projects and compression project behind Utica system
Executed new 25,500 acre dedication in the condensate window behind our Ohio Gathering Joint Venture
Executed new 10-year take-or-pay contract behind Double E, connecting a new 300 MMcf/d processing plant
Provided 2024 adjusted EBITDA guidance range of $260 million to $300 million

Management Commentary

Heath Deneke, President, Chief Executive Officer, and Chairman, commented, “Summit delivered solid fourth quarter 2023 financial and operating results representing run-rate Adjusted EBITDA of $300 million. It has been a very busy quarter, advancing a range of strategic alternatives and executing several key commercial milestones.

We are pleased with the continued strong level of interest from third parties for potential transactions‎, ranging from the sale of specific assets to consideration of Partnership-level transactions. We believe the strategic review process is entering advanced stages, and while there is no guarantee that any transaction will result from our strategic alternative review, we are making good progress narrowing the range of alternatives with the goal of maximizing value for the Partnership’s unitholders.

From a commercial perspective, we recently commissioned our DJ Basin de-bottlenecking projects, which will enable us to better utilize our processing complex and extract approximately $5 million of synergies in 2024. We commissioned the previously announced compression project behind our wholly owned Utica system, resulting in an incremental compression fee beginning in the first quarter of 2024. Further, our Ohio Gathering Joint Venture executed a new 25,500 acre dedication with a producer in the condensate window, illustrating the competitive positioning of our Joint Venture’s gathering footprint in the Utica. At our Double E joint venture, we executed a new 40 MMcf/d 10-year take-or-pay contract with an investment grade shipper to support a connection to a new 300 MMcf/d processing plant three miles from the pipeline. With this new connection, we believe Double E is well positioned to commercialize additional contracts as volumes upstream of the new processing plant increase.

We announced 2024 adjusted EBITDA guidance range of $260 million to $300 million, which we believe reflects the current headwinds, particularly in natural gas prices. Despite this volatility, we continue to see significant customer activity upstream of our assets with five rigs running behind our systems and remain encouraged with the long-term prospects for SMLP.”

Fourth Quarter 2023 Business Highlights

SMLP’s average daily natural gas throughput for its wholly owned operated systems increased 5.0% to 1,419 MMcf/d, and liquids volumes decreased 4.7% to 81 Mbbl/d, relative to the third quarter of 2023. OGC natural gas throughput decreased from 870 MMcf/d to 826 MMcf/d, a 5.1% decrease quarter-over-quarter and generated $11.3 million of adjusted EBITDA, net to SMLP, for the fourth quarter of 2023. Double E Pipeline gross volumes transported increased from 327 MMcf/d to 386 MMcf/d, an 18.3% increase quarter-over-quarter and generated $8.0 million of adjusted EBITDA, net to SMLP, for the fourth quarter of 2023.

Natural gas price-driven segments:

Natural gas price-driven segments had combined quarterly segment adjusted EBITDA of $50.3 million, representing a 2.5% increase relative to the third quarter, and combined capital expenditures of $3.0 million in the fourth quarter of 2023.
Northeast segment adjusted EBITDA totaled $28.4 million, an increase of $0.7 million from the third quarter 2023, primarily due to a 5.6% increase in volume on our wholly owned systems, partially offset by a 5.1% decrease in volume from our OGC joint venture. During the fourth quarter, three new wells were brought online behind our wholly owned Summit Midstream Utica (“SMU”) system and 11 new wells were connected behind our OGC joint venture. We commissioned the initial phase of a centralized compression project behind the SMU system and expect to charge an incremental compression fee beginning in the first quarter of 2024. Our OGC joint venture executed a new 25,500 acre dedication with a customer in the condensate window with an active rig behind the new dedication currently with new wells expected in 2024 and beyond. We expect seven new wells to be connected to the systems during the first quarter of 2024. There are currently three rigs running and 37 DUCs behind our systems.
Piceance segment adjusted EBITDA totaled $16.1 million, an increase of $0.8 million from the third quarter of 2023, primarily due to a 1.3% increase in volume throughput driven by 21 wells brought online during the quarter, partially offset by natural production declines.
Barnett segment adjusted EBITDA totaled $5.8 million, a decrease of $0.3 million relative to the third quarter of 2023, primarily due to approximately $0.4 million increase in operating expenses, partially offset by a 7.1% increase in volumes from six new wells connected to the system from our anchor customer in September. A customer continued to curtail volumes by approximately 20 MMcf/d during the quarter. Our anchor customer recently completed four new wells in early 2024 and expects to bring online an additional 10 to 20 wells in 2024. There is currently one rig running and 24 DUCs behind the system.

Oil price-driven segments

Oil price-driven segments generated $30.3 million of combined segment adjusted EBITDA, representing a 3.3% increase relative to the third quarter, and had combined capital expenditures of $14.9 million.
Permian segment adjusted EBITDA totaled $7.9 million, an increase of $2.1 million from the third quarter of 2023, primarily due to an increase in proportionate EBITDA from our Double E joint venture. Double E entered into a new 40 MMcf/d 10-year take-or-pay contract with an investment grade shipper to support a connection to the Janus Processing Plant (“Janus Plant”). The Janus Plant is currently being constructed with an expected capacity of 300 MMcf/d and Q1 2025 in-service date. The take-or-pay commitment was structured to support a return on Double E’s expected $6.0 million connection cost, $4.2 million net to SMLP. The additional connection strategically positions Double E for incremental contracts as the processing complex expands and volumes upstream of the plant increase.
Rockies segment adjusted EBITDA totaled $22.4 million, a decrease of $1.1 million relative to the third quarter of 2023, primarily due to a 4.7% decrease in liquids volume throughput, partially offset by a 7.7% increase in natural gas volume throughput. Lower realized commodity prices in the fourth quarter negatively impacted EBITDA by approximately $2.0 million relative to the third quarter, related to percent-of-proceeds contracts in the DJ basin. There were 42 new wells connected during the quarter, including 37 in the DJ Basin, expected to reach peak production in the second quarter 2024, and five in the Williston Basin. The DJ Basin de-bottlenecking project commissioned in the fourth quarter is expected to drive approximately $5.0 million of commercial and cost synergies in 2024. There is currently one rig running and approximately 84 DUCs behind the systems.

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

Three Months Ended December 31,

Year Ended December 31,

2023

2022

2023

2022

Average daily throughput (MMcf/d):

Northeast (1)

794

599

692

652

Rockies

126

42

113

33

Permian (1)

14

Piceance

317

295

304

306

Barnett

182

212

183

203

Aggregate average daily throughput

1,419

1,148

1,292

1,208

Average daily throughput (Mbbl/d):

Rockies

81

64

78

62

Aggregate average daily throughput

81

64

78

62

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

826

754

779

674

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

386

289

305

277

(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 December 31,

Year Ended December 31,

2023

2022

2023

2022

(In thousands)

(In thousands)

Reportable segment adjusted EBITDA (1):

Northeast (2)

$         28,443

$        19,057

$        94,249

$        77,046

Rockies

22,404

13,819

87,390

57,810

Permian (3)

7,924

4,203

24,207

18,051

Piceance

16,109

14,688

59,749

60,055

Barnett

5,791

7,227

26,171

31,624

Total

$         80,671

$        58,994

$       291,766

$       244,586

Less:  Corporate and Other (4)

5,655

8,666

24,922

32,296

Adjusted EBITDA

$         75,016

$        50,328

$       266,844

$       212,290

(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 natural gas and crude oil marketing services.

Capital Expenditures

Capital expenditures totaled $19.0 million in the fourth quarter of 2023, inclusive of maintenance capital expenditures of $3.3 million. Capital expenditures in the fourth quarter of 2023 were primarily related to pad connections and DJ Basin integration projects in the Rockies segment and installation of centralized compression behind our wholly owned Utica system.

Year Ended December 31,

2023

2022

(In thousands)

Cash paid for capital expenditures (1):

Northeast

$           4,695

$           8,743

Rockies

54,969

11,903

Permian

1,407

Piceance

4,544

6,116

Barnett

186

366

Total reportable segment capital expenditures

$         64,394

$         28,535

Corporate and Other

4,511

1,937

Total cash paid for capital expenditures

$         68,905

$         30,472

(1)

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

2024 Guidance

SMLP is releasing guidance for 2024, which is summarized in the table below. These projections are subject to risks and uncertainties as described in the “Forward-Looking Statements” section at the end of this release.

Our guidance range is anchored by recent drilling and completion schedules provided by our customers and is reflective of the current commodity price environment. We have taken a consistent approach to our 2024 guidance range that we did with our 2023 guidance range. If our producer customers hit their production targets and timing of planned well connects, we would expect to be near the high end of our 2024 guidance range. The midpoint of our guidance range reflects a conservative, yet appropriate, level of risking to the most recent drill schedules and volume forecasts provided by our customers. The low end of our guidance range reflects additional delays to customer drilling and completion schedules and planned well connects.

We expect approximately 170 to 230 well connections in 2024. Of the expected well connections in 2024, approximately 15% are dry-gas oriented wells, approximately 35% are liquids-rich gas-oriented wells and approximately 50% are crude-oil oriented wells. Customers are currently running five rigs behind our systems, with more than 140 DUCs, providing line of sight to the 2024 estimated well connections and associated volume growth.

We expect our wholly owned natural gas gathering system throughput to range from 1,255 MMcf/d to 1,345 MMcf/d, with volume throughput growth expected behind our Rockies and Barnett segments. OGC gross volume throughput is expected to range from 775 MMcf/d to 825 MMcf/d, as compared to 779 MMcf/d in 2023, representing approximately 2.7% year-over-year growth at the mid-point of the guidance range. Double E existing take-or-pay contracts of 985 MMcf/d will contractually increase to 1,020 MMcf/d beginning in November 2024. We expect to complete the Janus Plant connection in the first quarter 2025. Liquids volumes are expected to range from 65 Mbbl/d to 75 Mbbl/d.

Adjusted EBITDA is expected to range from $260 million to $300 million, representing approximately 5% year-over-year growth at the midpoint. Our 2024 capital expenditure guidance of $30 million to $40 million, excluding Double E, includes capital reimbursements related to specific development projects with certain customers. Our full year 2024 growth capex guidance range is primarily related to new pad connections in the Rockies segment. Included in this range is approximately $10 million to $15 million of maintenance capex. Double E capital expenditures for 2024 are expected to be approximately $5 million, net to SMLP, primarily related to connecting the Janus Plant.

($ in millions)

2024 Guidance Range

Low

High

Well Connections

Northeast (includes OGC)

55

75

Piceance

Barnett

15

25

Rockies

100

130

Total

170

230

Natural Gas Throughput (MMcf/d)

Northeast (excludes OGC)

625

675

Piceance

295

305

Barnett

200

220

Rockies

135

145

Total

1,255

1,345

Rockies Liquids Throughput (Mbbl/d)

65

75

OGC Natural Gas Throughput (MMcf/d, gross)

775

825

Double E Natural Gas Throughput (MMcf/d, gross)

500

500

Adjusted EBITDA

Northeast

$90

$100

Piceance

55

60

Barnett

20

30

Permian

30

30

Rockies

90

110

Unallocated G&A, Other

(25)

(30)

Total

$260

$300

Capital Expenditures

Growth

$20

$25

Maintenance

$10

$15

Total

$30

$40

Investment in Double E equity method investee

$5

$5

Capital & Liquidity

As of December 31, 2023, SMLP had $14.0 million in unrestricted cash on hand and $313 million drawn under its $400 million ABL Revolver and $82.7 million of borrowing availability, after accounting for $4.3 million of issued, but undrawn letters of credit. As of December 31, 2023, SMLP’s gross availability based on the borrowing base calculation in the credit agreement was $723 million, which is $323 million greater than the $400 million of lender commitments to the ABL Revolver. As of December 31, 2023, SMLP was in compliance with all financial covenants, including interest coverage of 1.93x relative to a minimum interest coverage covenant of 1.75x and first lien leverage ratio of 1.2x relative to a maximum first lien leverage ratio of 2.5x. As of December 31, 2023, SMLP reported a total leverage ratio of approximately 5.4x.

As of December 31, 2023, the Permian Transmission Credit Facility balance was $144.8 million, a reduction of $2.7 million relative to the September 30, 2023 balance of $147.5 million due to scheduled mandatory amortization. The Permian Transmission Term Loan remains non-recourse to SMLP.

MVC Shortfall Payments

SMLP billed its customers $7.1 million in the fourth 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 fourth quarter of 2023, SMLP recognized $7.1 million of gathering revenue associated with MVC shortfall payments. SMLP had no adjustments to MVC shortfall payments in the fourth quarter of 2023. SMLP’s MVC shortfall payment mechanisms contributed $7.1 million of total adjusted EBITDA in the fourth quarter of 2023.

Three Months Ended December 31, 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

$         (114)

$         (114)

$            —

$        (114)

Piceance

5,555

5,555

5,555

Northeast

1,694

1,694

1,694

Total MVC shortfall payment adjustments

$        7,135

$        7,135

$            —

$       7,135

Total (1)

$        7,135

$        7,135

$            —

$       7,135

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

Year Ended December 31, 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

$            24

$            24

$            —

$           24

Piceance

21,991

21,991

21,991

Northeast

6,619

6,619

6,619

Total MVC shortfall payment adjustments

$      28,634

$      28,634

$            —

$     28,634

Total (1)

$      28,634

$      28,634

$            —

$     28,634

(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 December 31, 2023. Unpaid distributions on the Series A Preferred Units will continue to accumulate.

Fourth Quarter 2023 Earnings Call Information

SMLP will host a conference call at 10:00 a.m. Eastern on March 15, 2023, to discuss its quarterly operating and financial results. The call can be accessed via teleconference at: Q4 2023 Summit Midstream Partners LP Earnings Conference Call (https://register.vevent.com/register/BI08da14a6e73a4b4daed7edf267c7f575). 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

.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 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.

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 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.

SUMMIT MIDSTREAM PARTNERS, LP AND SUBSIDIARIES

UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS

December 31,
2023

December 31,
2022

(In thousands)

ASSETS

Cash and cash equivalents

$        14,044

$        11,808

Restricted cash

2,601

1,723

Accounts receivable

76,275

75,287

Other current assets

5,502

8,724

Total current assets

98,422

97,542

Property, plant and equipment, net

1,698,585

1,718,754

Intangible assets, net

175,592

198,718

Investment in equity method investees

486,434

506,677

Other noncurrent assets

35,165

38,273

TOTAL ASSETS

$   2,494,198

$   2,559,964

LIABILITIES AND CAPITAL

Trade accounts payable

$        22,714

$        14,052

Accrued expenses

32,377

20,601

Deferred revenue

10,196

9,054

Ad valorem taxes payable

8,543

10,245

Accrued compensation and employee benefits

6,815

16,319

Accrued interest

19,298

17,355

Accrued environmental remediation

1,483

1,365

Accrued settlement payable

6,667

6,667

Current portion of long-term debt

15,524

10,507

Other current liabilities

10,395

11,724

Total current liabilities

134,012

117,889

Long-term debt, net

1,455,166

1,479,855

Noncurrent deferred revenue

30,085

37,694

Noncurrent accrued environmental remediation

1,454

2,340

Other noncurrent liabilities

30,266

38,784

Total liabilities

1,650,983

1,676,562

Commitments and contingencies

Mezzanine Capital

Subsidiary Series A Preferred Units

124,652

118,584

Partners’ Capital

Series A Preferred Units

96,893

85,327

Common limited partner capital

621,670

679,491

Total partners’ capital

718,563

764,818

TOTAL LIABILITIES AND CAPITAL

$   2,494,198

$   2,559,964

SUMMIT MIDSTREAM PARTNERS, LP AND SUBSIDIARIES

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

Three Months Ended

December 31,

Year Ended

December 31,

2023

2022

2023

2022

(In thousands, except per-unit amounts)

Revenues:

Gathering services and related fees

$      67,731

$      60,893

$    248,223

$    248,358

Natural gas, NGLs and condensate sales

48,889

18,861

179,254

86,225

Other revenues

10,698

5,969

31,426

35,011

Total revenues

127,318

85,723

458,903

369,594

Costs and expenses:

Cost of natural gas and NGLs

34,495

12,664

112,462

76,826

Operation and maintenance

25,450

22,936

100,741

84,152

General and administrative

10,238

12,960

42,135

44,943

Depreciation and amortization

32,030

29,658

122,764

119,055

Transaction costs

325

5,218

1,251

6,968

Acquisition integration costs

258

2,654

Gain on asset sales, net

(77)

(98)

(260)

(507)

Long-lived asset impairment

85

540

91,644

Total costs and expenses

102,804

83,338

382,287

423,081

Other income (expense), net

118

865

(4)

Gain (loss) on interest rate swaps

(3,021)

(77)

1,830

16,414

Loss on sale of business

(2)

(1,656)

(47)

(1,741)

Interest expense

(36,818)

(28,477)

(140,784)

(102,459)

Loss on early extinguishment of debt

(10,934)

(10,934)

Loss before income taxes and equity method
investment income

(26,143)

(27,825)

(72,454)

(141,277)

Income tax expense

(502)

(18)

(322)

(325)

Income from equity method investees

11,527

3,979

33,829

18,141

Net loss

$     (15,118)

$     (23,864)

$     (38,947)

$   (123,461)

Net loss per limited partner unit:

Common unit – basic

$        (2.12)

$        (3.03)

$        (6.11)

$      (12.71)

Common unit – diluted

$        (2.12)

$        (3.03)

$        (6.11)

$      (12.71)

Weighted-average limited partner units outstanding:

Common units – basic

10,376

10,172

10,334

10,048

Common units – diluted

10,376

10,172

10,334

10,048

SUMMIT MIDSTREAM PARTNERS, LP AND SUBSIDIARIES

UNAUDITED OTHER FINANCIAL AND OPERATING DATA

Three Months Ended

December 31,

Year Ended

December 31,

2023

2022

2023

2022

(In thousands)

Other financial data:

Net loss

$     (15,118)

$     (23,864)

$     (38,947)

$   (123,461)

Net cash provided by operating activities

16,147

1,939

126,906

98,744

Capital expenditures

19,042

9,517

68,905

30,472

Contributions to equity method investees

3,500

8,444

Adjusted EBITDA

75,016

50,328

266,844

212,290

Cash flow available for distributions (1)

37,817

20,245

125,603

107,390

Free Cash Flow

20,436

10,209

59,042

73,488

Distributions (2)

n/a

n/a

n/a

n/a

Operating data:

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

1,419

1,148

1,292

1,208

Aggregate average daily throughput – liquids (Mbbl/d)

81

64

78

62

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

826

754

779

674

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

386

289

305

277

(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 SUBSIDIARIES

UNAUDITED RECONCILIATIONS TO NON-GAAP FINANCIAL MEASURES

Three Months Ended

December 31,

Year Ended

December 31,

2023

2022

2023

2022

(In thousands)

Reconciliations of net income to adjusted EBITDA
and Distributable

    Cash Flow:

Net income (loss)

$     (15,118)

$     (23,864)

$     (38,947)

$   (123,461)

Add:

Interest expense

36,818

28,477

140,784

102,459

Income tax expense

502

18

322

325

Depreciation and amortization (1)

32,264

29,892

123,702

119,993

Proportional adjusted EBITDA for equity method
investees (2)

18,415

11,612

61,070

45,419

Adjustments related to capital reimbursement activity (3)

(3,096)

(1,218)

(9,874)

(6,041)

Unit-based and noncash compensation

1,408

814

6,566

3,778

Loss on early extinguishment of debt

10,934

10,934

Gain on asset sales, net

(77)

(98)

(260)

(507)

Long-lived asset impairment

85

540

91,644

(Gain) loss on interest rate swaps

3,021

77

(1,830)

(16,414)

Other, net (4)

1,387

8,597

7,666

13,236

Less:

Income from equity method investees

11,527

3,979

33,829

18,141

Adjusted EBITDA

$      75,016

$      50,328

$    266,844

$    212,290

Less:

Cash interest paid

54,273

43,379

127,022

89,472

Cash paid for taxes

15

149

Senior notes interest adjustment (5)

(20,363)

(17,099)

1,847

4,315

Maintenance capital expenditures

3,289

3,803

12,357

10,964

   Cash flow available for distributions (6)

$      37,817

$      20,245

$    125,603

$    107,390

Less:

   Growth capital expenditures

15,753

5,714

56,548

19,508

   Investment in equity method investee

3,500

8,444

   Distributions on Subsidiary Series A Preferred Units

1,628

1,628

6,513

4,885

   Free Cash Flow

$      20,436

$      12,903

$      59,042

$      74,553

(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 year ended December 31, 2023, the amount includes $3.8 million in transaction costs, $2.6 million of acquisition integration costs, and $1.6 million of severance expenses. For the year ended December 31, 2022, the amount includes the amount includes $8.6 million in transaction costs, $2.5 million of severance expenses and $1.7 million of losses related to sale of business.

(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 SUBSIDIARIES

UNAUDITED RECONCILIATIONS TO NON-GAAP FINANCIAL MEASURES

Year Ended

December 31,

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

$      126,906

$       98,744

Add:

Interest expense, excluding amortization of debt issuance costs

128,099

93,133

Income tax expense

322

325

Changes in operating assets and liabilities

19,692

13,538

Proportional adjusted EBITDA for equity method investees (1)

61,070

45,419

Adjustments related to capital reimbursement activity (2)

(9,874)

(6,041)

Realized gain on swaps

(5,149)

(397)

Other, net (3)

7,123

11,494

Less:

Distributions from equity method investees

57,572

43,040

Noncash lease expense

3,773

885

Adjusted EBITDA

$      266,844

$      212,290

Less:

Cash interest paid

127,022

89,472

Cash paid for taxes

15

149

Senior notes interest adjustment (4)

1,847

4,315

Maintenance capital expenditures

12,357

10,964

   Cash flow available for distributions (5)

$      125,603

$      107,390

Less:

   Growth capital expenditures

56,548

19,508

   Investment in equity method investee

3,500

8,444

   Distributions on Subsidiary Series A Preferred Units

6,513

4,885

   Free Cash Flow

$       59,042

$       74,553

(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 Year ended December 31, 2023, the amount includes $3.8 million in transaction costs, $2.6 million of acquisition integration costs, and $1.6 million of severance expenses. For the year ended December 31, 2022, the amount includes $8.6 million in transaction costs and $2.5 million of severance expenses.

(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


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