Summit Midstream Corporation Reports Third Quarter 2024 Financial and Operating Results

PR Newswire

HOUSTON, Nov. 12, 2024

HOUSTON, Nov. 12, 2024 /PRNewswire/ -- Summit Midstream Corporation $(SMC)$ ("Summit", "SMC" or the "Company") announced today its financial and operating results for the three months ended September 30, 2024.

Highlights

   -- Third quarter 2024 net loss of $197.5 million, including $142.6 million 
      non-cash income tax expense to primarily establish SMC's deferred tax 
      liability associated with the C-Corp conversion 
 
   -- Generated adjusted EBITDA of $45.2 million, representing approximately 9% 
      quarter-over-quarter growth1, cash flow available for distributions 
      ("Distributable Cash Flow" or "DCF") of $22.1 million and free cash flow 
      ("FCF") of $9.9 million 
 
   -- Expect to generate approximately $45 million to $50 million of adjusted 
      EBITDA in the fourth quarter 2024 
 
   -- Connected 38 wells during the third quarter and maintained an active 
      customer base with six active drilling rigs and more than 100 drilled but 
      uncompleted wells ("DUCs") behind our systems 
 
   -- Closed the C-Corp conversion and a series of re-financing transactions, 
      further simplifying our corporate structure, extending debt maturities 
      and lowering our cost of capital 
 
   -- Announced the transformative acquisition of Tall Oak Midstream III in 
      the Arkoma Basin and filed the definitive proxy with the special meeting 
      of stockholders expected to occur on November 29, 2024 
 
(1)  Normalized for $1.6 million of Northeast segment adjusted EBITDA 
     generated in the second quarter 2024 
 

Management Commentary

Heath Deneke, President, Chief Executive Officer and Chairman, commented, "Summit's third quarter operating and financial results were in line with management expectations, reflecting a very active quarter both corporately and operationally. From a corporate perspective, we closed out the C-Corp conversion, successfully refinanced our balance sheet and announced the transformative acquisition of Tall Oak Midstream III. We believe these transactions continue to position Summit for further growth and significant value-creation for our shareholders.

From an operational perspective, we connected 38 wells to the system, have six rigs currently operating behind our footprint and made final investment decision on a $10 million optimization project in the Rockies segment that is anticipated to have an approximate one-year payback period and improve our Adjusted EBITDA margin beginning in the second quarter 2025. Nine of the 38 wells were connected behind our Barnett system which brings total year-to-date well connections in the Barnett to 27 wells, with a rig continuing to drill wells expected in 2025. The other 29 wells connected during the quarter came from the DJ Basin, bringing total year-to-date wells to 86, exceeding our expectations with activity levels and volumes behind the system remaining robust.

Additionally, as a brief update to our recently announced Tall Oak acquisition, we continue to expect to close the transaction during the fourth quarter of 2024. Since announcement, the Tall Oak management team executed a new contract for approximately 20 MMcf/d of existing in-basin production that is expected to begin deliveries to Tall Oak in the second half of 2025 and continue to see the active rig drilling wells that are expected to come online as soon as the end of this year. We filed the definitive proxy on October 31, 2024 with the special meeting of stockholders currently scheduled on November 29, 2024. Each shareholder's vote is important to us so we encourage all shareholders to vote."

Third Quarter 2024 Business Highlights

SMC's average daily natural gas throughput for its wholly owned operated systems decreased 6.8% to 667 MMcf/d, and liquids volumes decreased 6.7% to 70 Mbbl/d, relative to the second quarter of 2024. Double E Pipeline gross volumes transported increased from 549 MMcf/d to 661 MMcf/d, a 20.4% increase quarter-over-quarter and generated $8.5 million of adjusted EBITDA, net to SMC, for the third quarter of 2024.

Natural gas price-driven segments:

   -- Natural gas price-driven segments had combined quarterly segment adjusted 
      EBITDA of $20.1 million, representing a 1.1% increase relative to the 
      second quarter and combined capital expenditures of $1.7 million in the 
      third quarter of 2024. 
 
   -- Piceance segment adjusted EBITDA totaled $12.8 million, consistent from 
      the second quarter of 2024. Volume throughput decreased 1.7% from the 
      second quarter primarily due to natural production declines and no new 
      wells connected to the system during the quarter. 
 
   -- Barnett segment adjusted EBITDA totaled $7.3 million, an increase of $1.9 
      million relative to the second quarter of 2024, primarily due to a 26.2% 
      increase in volumes from a customer continuing to increase flow of 
      curtailed volumes and 9 new wells connected to the system from our anchor 
      customer during the quarter. We estimate there is still approximately 
      20 MMcf/d of shut-in production behind the system. There is currently one 
      rig running and 14 DUCs behind the system. 

Oil price-driven segments:

   -- Oil price-driven segments generated $33.3 million of combined segment 
      adjusted EBITDA, representing a 9.1% increase relative to the second 
      quarter, and had combined capital expenditures of $8.7 million. 
 
   -- Permian segment adjusted EBITDA totaled $8.5 million, an increase of $0.8 
      million from the second quarter of 2024, primarily due to 20% increase in 
      volumes shipped on the Double E Pipeline leading to an increase in 
      proportionate adjusted EBITDA from our Double E joint venture. 
 
   -- Rockies segment adjusted EBITDA totaled $24.9 million, an increase of 
      8.7% relative to the second quarter of 2024, primarily due to increased 
      product margin in the DJ Basin, partially offset by a 6.7% decrease in 
      liquids volume throughput. Operational downtime continued to impact 
      volume throughput in the DJ Basin, however, repairs were completed during 
      the quarter, and all systems have now returned to normal operational 
      capacity. There were 29 new wells connected during the quarter, all in 
      the DJ Basin. There are currently five rigs running and approximately 90 
      DUCs behind the systems. 

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

 
                                Three Months Ended    Nine Months Ended 
                                   September 30,        September 30, 
                               --------------------  ------------------- 
                                 2024       2023       2024      2023 
                               --------  ----------  --------  --------- 
Average daily throughput 
(MMcf/d): 
Northeast (1)                        --         752       269        658 
Rockies                             128         117       127        108 
Piceance                            284         313       295        299 
Barnett                             255         170       212        184 
                               --------  ----------  --------  --------- 
 Aggregate average daily 
  throughput                        667       1,352       903      1,249 
                               ========  ==========  ========  ========= 
 
Average daily throughput 
(Mbbl/d): 
Rockies                              70          85        73         76 
                               --------  ----------  --------  --------- 
 Aggregate average daily 
  throughput                         70          85        73         76 
                               ========  ==========  ========  ========= 
 
Ohio Gathering average daily 
 throughput (MMcf/d) (2)             --         870       283        763 
                               ========  ==========  ========  ========= 
 
Double E average daily 
 throughput (MMcf/d) (3)            661         327       559        278 
                               ========  ==========  ========  ========= 
 

_________

 
(1)  Exclusive of Ohio Gathering 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                  Nine Months Ended 
                             September 30,                       September 30, 
                  -----------------------------------  -------------------------------- 
                         2024              2023             2024             2023 
                  ------------------  ---------------  ---------------  --------------- 
                            (In thousands)                      (In thousands) 
Reportable 
segment adjusted 
EBITDA (1) : 
Northeast (2)     $               --  $        27,751  $        30,634  $        65,806 
Rockies                       24,850           24,998           70,582           64,986 
Permian (3)                    8,472            5,840           23,434           16,283 
Piceance                      12,831           15,292           40,912           43,640 
Barnett                        7,278            6,084           17,798           20,380 
                  ------------------  ---------------  ---------------  --------------- 
 Total               $        53,431  $        79,965   $      183,360   $      211,095 
Less: Corporate 
 and Other (4)                 8,193            7,175           24,915           19,267 
                  ------------------  ---------------  ---------------  --------------- 
 Adjusted EBITDA 

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