SMLP - Earnings call transcript Q4 2020 | Summit Midstream Partners, LP

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Operator

Welcome to the Q4 2020 Summit Midstream Partners, LP Earnings Conference Call. My name is Rebecca and I'll be your operator for today's call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session. [Operator Instructions] I'll now turn the call over to Ross Wong, Senior Director of Corporate Development and Finance. begin. may you Ross,

Ross Wong

good and morning, operator, everyone. Thanks,

it of don't Stratton, release that our you our or at will Quarterly already Presentations with quarter Events our morning, have earnings Officer Executive President, our website financial find you where of Results copy www.summitmidstream.com the was today senior our Financial operating section along and visit homepage, & a please our Marc If on issued Officer; section. this Chief me members With fourth results team. to other Chief and discuss XXXX is Deneke, management Chairman; Heath earlier

of we may volumes, capital and They to contain plans Before include, business operating remind may today These expenditures. statements for concerning other and also statements. liquidity, our and estimates statements operations. flow, may discussion objectives limited like anticipated future future I'd forward-looking strategy not cash but expenses you start, are include that our to,

I These statements our in call use that, And as actual our XXXX could to GAAP measures XXXX financial results Although non-GAAP reconciliations we adjusted we earnings directly will filings cause SEC that most will terms comparable filed the see the be Heath. over to have turn Please believe on cash forward-looking to such are correct. that recent release. call, differ we that materially a no this well factors SEC EBITDA, prove flow. X, from that and we expected reflected on most note of with results. to Please expectations in annual the measures as with on also the provided EBITDA and the such distributable provide assurance March our can XX-K, are other was which Form expectations for report reasonable, listing

Heath Deneke

was million, XXXX adjusted you, over call. reported of our an third fourth of represented million $XX.X quarter results. Good joining expectations our this XXXX fourth for line Thanks EBITDA morning, with quarter morning in Earlier for and everyone. Great. which quarter improvement us earnings $X Thank Ross. Summit approximately our

were financials day Ohio the the Summit, Gathering factors variety production of than million shut which a strong net our quarterly including Our a was return to third quarter. performance influenced of Utica XX from of by more in segments, including in

We cost liquid that also reductions new And brought on wells connected office were operations. our eight back and our to continued to field gain across Wilson we've system.

Utica relative million and XXXX. aggregate, then, quarter Our XX%. to Gathering of EBITDA And volume the Ohio more of third over in adjusted the quarter quarter $X.X incremental an each than segments, of experience increases produce

For the implications full that year Summit the that of the that lower generated the established July, we COVID-XX the within across customer in our footprint. expected we adjusted EBITDA, activity environment guidance range was of slowdown pandemic, in $XXX.X commodity price million which and our reflected

throughout of million cash our for total creative cash as investment approximately generated In executed which by in stakeholders, flow, we the year. Double demonstrated us last and opportunities pursue $XXX transactions of E. the we strategic a year, management $X.X to We of from based CapEx amount continue And from $XX.X expenditures operations, on million quarter, generate free million business. based a of million to of cash and low during capital substantial million cash our we flow of cash primarily fourth $XX.X generated $X.X flow fee for enabled theories related that free liability the

to loss a of there's that fourth partnership today's an $XX quarter touch flow free extracting continued we're discipline meaningful fee if on emphasis efficiencies, is Given environment. XXXX. generate continue to challenging release extended contingent and and million the accrued want One other earnings even operating of well very forward, cash financial of the our amount macro important to that matter contracts, our during portfolio going I fixed a on and positioned

system potential back annual of Water and violations agencies occurred, regarding the For quarterly nearly state And foreign on federal Justice this we back the spent very have civil been pipeline we've XXXX Wilson in January statutes through and preventative reference the the disclosures, achieved and on engaged to Department violations our a litigation, accrual resolution incident it resolution as disclosed water produce of the to million any XXXX. is affiliates through associated its or negotiated resolution readers to this We that this the timing dating that provided of remediation encourage a with if the of XXXX, metalwork a and Since unclear and and improvements metalwork disclosures rupture under have Since costs. rupture background, our criminal the $XX disposal system subject dating a environmental with the remains on unfortunate to potential relates US I refer at previously and point. involved the Clean and this financial could rupture reporting partnership to as in incident. to settlement, a unknown be to point, such Act. basin. incident this discovering At these

with in $XX the the loss of quarter to gap million requirements, comply fourth contingency XXXX. However, certain partnership a accrued

of actual higher We the this materially this predict the would accrued matter. reasonably continue than loss lower amount. cannot loss a any or at incurred is whether be to the believe point issues in that due complexity We time resolving to probable surrounding

in total repurchase another $XX.X million. also more which offer And over the million preferred eliminated have with cash on Summit capturing settlement capital [ph] fixed our through a capital the of close $XXX fixed During units. restructuring obligations, reduction deep XX%. our continue of million and the in quarter, fourth value transaction. included term tender $XXX recourse average than for A by conjunction for BPO XXXX initiatives. retired $XXX our loan we million to series XXXX, of weighted recourse a million $XXX the indebtedness In face liability was more In roughly discount than obligations, done our we we the total, notes, of successfully of management This execute

which addition, December an completing we capped provides that be added XXXX. our covenant headroom support $XXX additional liability Further, debt also leverage another management of a amendment junior environment also our Summit able revolving our revolver on provides financial features to to increased balance were of to to revolver our next extinguish our the our flexibility X.XX continuation million into XX option our million lien XXXX and sheet. basket that off amendment could program focus and we expect market liability term largely with our maturities. program, us of under management recapitalize total additional GP with XXXX credit challenging loan. the which what The to facility $XXX.X times, covenant In will provides We phase in threshold newly the

our maturities, management senior revolving initiatives, and of place, amendment the XXXX including phase we first notes the completed we've our in and are the turning credit our the revolver addressing that debt liability with attention Now facility. towards

raising the a capital us limited are business on two. that and evaluating multiple to and are recognize continue We ample in are definitely new debt the currently options, and not and and in improve focused several of years next to tier solution over we exchange, future. excel flexibility We but form financing using including term deliver markets approach high an of long believe liquidity secured up robust, yield developing commodity prices to the the hybrid will position as the sheet the comprehensive to provide that we balance

financial and few the out proactively Over and related management past expressed or in months, in institutions us suits interest have transactions. numerous Summit program, to leading involved reached per being liability

capital debt there the like will matures are will exact in further options decide financial enhance structure, to takeaway to on we to value you know, viable that take, throughout refinance is on further available while path the yet attractive to look maturities lot While also a our Summit for our to XXXX have note which of key the we believe going addressing we to I to down that road. very maturities. our focus, capture believe and still even we're flexibility continue opportunities these options the is we entire

announced all pipeline bank project. first progress. commitments having received and project and have proceed approvals necessary previously Double to for with the BLM We make as continued secured to construction we're also great E financing The

notice fourth great progress make we activities project bring initiated With the during de have and to continued construction the and quarter to January of the XXXX. overall the the to proceed also budget. in of reducing The online expect receipt risking has team project

that E continue $XXX will to Double our be We million below expect budget. at capital current all completed

capital FID the XXX. [ph] As we original have the we was project, it started to since a XXX. budget reduced And the reminder project, when

capital in we contingency As the approximately of project million of savings. identified February, to budget, of further an $XX remaining which could lead had realization

of million owned As subsidiary in previously of our the early leading finance commitments three banks E wholly transmission $XXX to commercial unrestricted development Permian from Summit Double received February. announced,

them sheet near from it and in will environment a in into will providing guidance this was way guidance. Delaware of solution for and shortfall $XXX continue adjusted to also project customers, slowdown This in our This sort with our which great XXXX to well of was flaring access fund provide both communities from transportation to web financing important to but that clear the down thereby to will flexibility to expected We to need reduction the NBC EBITDA it balance a effective XXXX to achievement the path bring payments. a on northern project Mexico. unexpected In we million. only We're in important for attracted due New we our of investment more Summit enhancing and $XXX disclose this help mid-February, $XXX and customer service XXXX. sheet, the for it the creates $XXX benefit fully also local LPs additional together financial activity, This Not markets, us this pipeline year. generated additional reducing the an without and a Texas $XX cash downstream adjusted summit million later estimated balance gas term. outlook Shifting cost million improve million excited very project allows because economically, the for advance approximate primarily very EBITDA to XXXX. utilizing ranges million by in and

range results, of I've financial we plans. development appropriate objective being Mark realistic of with very look, committed speak the In latest a production use drilling forecasts some the last guidance, detailed and high includes that and that expected at risking also believe some year outlook. do later similar starting guidance level the about setting like our ‘XX in assumptions segment in will summarize said point. past, to to But transparent with a stakeholders our key XXXX as So considerations a to customer developing our about we were as to we level, and and our customers the provided approach schedules the call. our behind I'd a completion took of by the

We the further some also applied then applied of risky risking the of the range. And end at at even midpoint range. the low we assumptions then

we're XXX in XXXX XXXX, XXXX, in to new wells to to XX which expecting new in XXX XXXX wells For in be wells and XXX to compares systems XX our connected XXXX. and wells

definitely have drilled capital at we be wells The the low think these forecast this of us that have forecasts at XXXX. is active I'll to the most in new for programs. given of moment, we is to our that are this to XXXX activity activity, minute. XX% midpoint range by is approximately here there currently data amount recently or new included in our is back clear probable being And wells of abnormally we drilled. wells in of remaining been online. a while in So in have come amount line a affirmed included that believe XXXX low customers and the that permits the sight And a our either their coming are Look, are

Permian systems DJ, our limited Wilson basins. and expect on activity We XXXX in the

we see believe these some can as increase. upside continue we areas do However, oil to prices from

very bit drilling commodity benefit towards certainly improving that second reminder, recent in bring wells gas year we've rally activity XXXX for as drive a and this the outlook new head a into experienced that of customers As will of half a that crisis, lag we and there's despite will end our oil to of online in hopeful during we're further time the XXXX. the the response us

their ends guidance on expected some IP the customers for range rates. of so Now achieve now and our our commentary book if stated plans additional

step and I volume to risks EBITDA agreement year. the a as achieve lower free a lower as $XX $XX of put given Utica would expect as of Majority corresponding guidance contractual million. generation, roughly million down of includes we evaluating of timing term incentive You and a in know, capital at substantial is we to she place that approximately to in reflect, the the a believe of customer discipline risk of capital growth risks, volume and time said, cash a last expect those end as segment also $XX new And XXXX schedule maintenance the flow roll-offs. $XXX those privilege, million, million potential a result in wells of in expenditures. mentioned, result some as upper the well you lot know, plans, you near is at of end with as the which Also, what customer on be previously inclusive we our range capital million of looking $XXX this to amount we capital XXXX does growth an And know, [ph] related to range accommodate for guidance emphasis volumes. ABC they guidance we of of versus a expenditures of $XX roughly million total growth of our spent

expect XXXX, still million. to sufficient relative we $XXX deadness to we our all and after million capital to $XXX to cash outstanding interest expense expenditures line generate XXXX, to in reduce approximately soften by Although metrics top expect

certainly, to have interest venture not we've natural assets. commodity particularly we gas best also opportunities potential have core area activity side. renewed we including in the continue prices we guidance and focus our joint legacy seen conversations the And strengthen range, as it's a regarding within teachers recently, certainly While have, seen on our constructive and

I'll We we strengthen sheet. creative also believe we we'll to to for M&A as look, With we a the our to and over And well. very we and recognize in continue balance closely results. and further plan that could our be XXXX opportunities corporate that financial execute review monitor that, right transaction market our will could point a these continue evaluate optimistic financial disciplined flexibility it manner from in to to Marc vantage consolidation theme. enhance remain that that And hand can

Marc Stratton

was in of path line that and wells a of return new of were turned September, in we day areas. in the new around And begin a to the cubic core Heath. good including quarter. third [ph] up relative of with system of the I'll everyone. line driven all and Utica volume in of XXXX. ducks increase million, million end morning, in averaged XX $X.X day focus adjusted XXXX, were few end expect next the quarter, to Starting comprise fourth in shutting A segments a the seven XXX million our segment the over shale, the them the Thanks, EBITDA feet that the well Great. at million segment four And quarter-over-quarter SMU primarily by third with $X.X There production totaled XXXX. quarter which be discussion temporarily XX.X% the XX in Utica turned the shell was weeks. the

previously, agreement amended on upstream one incentivize we forward gathering with system. year, and wells larger accelerated noted of to our SMU last our we customers the activity As bring

line expect a XXXX segment system We in XXXX Overall, incentive to arrangement for our this full adjusted catalyst behind the near year over we will shale be development SMU results. expect with Utica be EBITDA term.

prior summit million $X.X increase new segment, for largely saw the cubic as XX adjusted as day the third third million a were a from XX production quarter. the by quarter. customers the For feet high $X.X EBITDA curtailed temporarily a in totaled ODC Ohio our in quarter, in all net connected quarter million third which quarter, increase we the volume gathering late returned XX.X% to the system wells to throughput. was fourth driven from And

to EBITDA will our have million We the expect OGC. in in which ducks new the capital system $XX.X expect in third XXXX, to We liquid gas due already [ph] our fourth wells first wells change million four the the that totaled de X.X% XXXX, in OGC commission quarter, mix, have Liquid contributions on volume two or gas segment to and day, customers primarily impact connection have And a X.X% seven minimis capital We are barrels during and amendments we and to drilled, equity on in SMLP. quarter save first ducks this to behind new recent of volume the six incentivize a decrease from fund bring our in a will and wells customer by intend in from approximately forward our the were XX don't were quarter, OGC higher [ph] ownership to Wilson completion Wilson been of which eight adjusted the due which $X.X activity. impact dry turned in inventory quarter and increased line XXXX. system. contract new to XX,XXX drilling primarily currently since volumes behind in per window.

of in All XXXX. will line in expect be turned we which

natural of Williston wells quarter, new pads the to rise volume production an were we the and quarter-over-quarter XX prices to wells totaled if EBITDA the quarter, per a segment $X.X million offset cubic during declines Quarter-over-quarter While in there's from were connected oil day. X% limited feet adjusted partially for a X.X% primarily comprising decrease volume crude by decrease XXXX, continue million the do fourth throughput number that activity third decreases driven due throughout connections in XX by two quarter. think expect we increased DJ to in year. a opportunity basin

DUCs XX, our have system. customers XX our As XXXX, DJ of December behind

any expecting to on DJ not However, due well main new near system for to our special we two the aren’t customers. situations be we for XXXX, completed expect And in them do term. connections

basin-focused by they being area in expect on another our DJ and in our customers to disclosed service that focus publicly of opportunities outside company, is process the their development One they acquired of acreage of XXXX.

has other in service activities development focus DJ decided away the XXXX from area. contiguous acreage region its Our lands and to our customer to to large on federal acreage

XXXX be activity return too preliminary to predictions an expect it's conversations will that beyond may make our XXXX. in and system early indicate upstream XXXX, While DJ behind customer anomaly, we new

that XXXX fourth to the was In forward. likely setback rule activity foot in Colorado's customer quarter impact addition, implemented in Colorado going is

rural adversely don't we this rule. we expect be affected the However, area operate by Hereford where to

fourth sales, of to quarter, payment $XXX,XXX total the EBITDA adjusted to true maintenance and relative a quarter, for attributable on decrease million segment the margins conducted Permian period was due decreased The of prior natural primarily during of $X.X to the $X.X to volume fourth expenses decrease third X.X% throughput million NGL in Our approximately gas customers natural production declines. certain increased largely in and quarter. a

wells currently expect represent which the will have XXXX. in segment the in inventory in system, in behind be the new in connections two customers well of quarter turned DUCs only first Permian we and line these XXXX, the Our

our for focused one Permian most expect if in offset in be there which customers our activities likely is the cubic of Williston, XXXX, our are potential to million segment, XXXX suggests XX service activity area. partially declines. We of natural should rise, upside latest outside throughput to the increased crude of that feedback feet oil Similar continue a production delivering prices although to day

of quarter, Our translated the which EBITDA in million combined $XX.X expenditures. legacy Marcellus of fourth of generated $XXX,XXX into Piceance, free flow combined adjusted $XX.X after which the capital areas million and segment Barnett segments include cash

creative currently, system new the there were first XXXX. fully third since fourth There half during we of behind base mature Both volume our be connects in these could XXXX. cash and eight DUCs to $XX.X flow XXXX, connections being Marcellus expected online Nine of built well of $XX.X systems infrastructure generation, flow loads including the XXXX, respectively. million these well to represent new new expect no during quarter, significant system are and million full are systems come growth cash XX Barnett so of existing and in and of wells to production. of Barnett flow, highly declined are in quarter generate free and an first are to the the producing Marcellus the continues year XX The gathering on quarter process are meaningful of catalyst wells cash in DUCs these seven Although the new will Piceance out, and the fourth for free drilled.

would are aren't we well Although help considering new XXXX, engaged production XX natural certain discussions wells who forecasting in we customers are up new late in in connections with any which to declines. arrest actively XXXX,

time, strong low NBC's guidance. beyond, we in these expect Piceance continue fee flow will at due [ph] CapEx our XXXX in free and our that cash included segment However, We this contracts haven't generating requirements. and wells to its based do

$X was line maintenance quarter, Capital with our $X.X to which of the majority million to which open for reported charge million million. capital to of million fourth $XX.X the market million The Now, CapEx. and come the million DCF $X.X was dollars, the gain segments, partially to connect million $XXX.X quarter $XX partnership. pad repurchase by and January the a $X.X in impacted SMP of SMLP that's holdings, the and the impairment four of in EBITDA of expense to included related early contingency was net discharge turning of back $XXX.X debt of fourth Net by a notes income DJ of online an senior of sale consensual expected XXXX. of income XXXX. million and in SMU non-cash asset a million third quarter expenditures of a for extinguishment from adjusted compressor totaled projects associated and charges Utica system CapEx $XXX with positively closed million equipment, unsecured on quarter first and related offset in including loss term restructuring debt loan our well $XX.X

contributions during made also the quarter. cash Double We E to of $X.X million

earlier, to million contributions to of within results Double don't range. make incurred was capital inclusive the the otherwise capital E For have which $XX would due We billion that totaled facility full available borrowing of million of XX, assets, $X.X SMLP $XXX million approximately our E, XXXX. covenant in the contributions of million $XXX to of to SMLP our which for times. million and total at XXXX, at Total revolving in $XX liquidity $XXX Double leverage first $XX capacity to our secured million had times was commercial was We bank at XXXX, in outstanding we to at compared end million, approximately approximately of year compared and guidance December XXXX. year our we investments, CapEx fund. credit X.X maximum committed Subject expect under reallocation a year-end times limit limits, year-end direct financing $XXX lien times any had was operated to a to maximum leverage X.XX X.X have and X.X limit of

Heath interest in cash expenditures, expense million mentioned to we reduce after to $XXX outstanding XXXX, indebtedness capital sufficient by earlier, expect approximately generate $XXX and to As million.

equipment free begun generation, January. We first of $X cash an which months unutilized and flow in was XXXX, in of reduce million comprised have already sale two compressor to the outstanding indebtedness of

Our currently $XX at sits balance revolver XXXX. which down relative to million in is $XXX year million,

call over Heath remarks. Now closing with for turn the to I'll that, back

Heath Deneke

Series-A transaction really Great. to with implement the bank team of and in in Buy-In Preferred GP sequence for amendment was challenging May in started and Thanks, a a was XXXX. transactions. closing December. all through with It the Units This transformation achieved proud Mark. our the complex and of able Summit cash that tender a Look, I'm

Double to a yet by public governance planned, a been independent achieved balance now we Board unitholder milestones XXXX with will do align sheet. result on fully activities, SMLP’s structure a We've balance able on to we've interests strategic, of project to able our value the with approach for our financing, further that the simplified not ensure be sheet, management. fully E, critical that Directors. we're only time, we without aggressive, of now while a taking also but Furthermore, also liability the that again, several our helped completed burdening as stakeholders, As have generating of significant amount and

systems. will certainly well capital to result markets. point providing before, is now being our see and cycle. in be as as XXXX with prices the well at to our always, And adjusted early While new beginning the to really, to very We're behind are substantial activity unprecedented this late to $XXX systems XXXX of that in could behind likely that EBITDA that recovery those do are of said our activity overall what XXXX signs And transparency, We're commodity bottom spurred XXXX, and I projected believe guidance as year realistic and new think we represent some our be a achievable. committed, $XXX improvement million million in we an believe I higher stakeholders. a our of also of lows

also E certainly those have place discipline. have confident the on maturities XXXX to goals. the We biggest right and the in can core a to will which year. and project success under financial and focus employing And Addressing priorities tools focused our people, progressing while business remain an by we very debt resources development year-end, the we those from that we for principles, our operating two on of guiding control, guided things are strategic the in past, and Double achieve the I'm our will asset operational to look, that continue

So I'm more team excited I'm of extremely the ahead. proud has at past lays what year. the end for what this accomplished Summit even

like to over operator, the for that I'd turn So call with questions.

Operator

from And Carreker open. [Operator is James question your is our U.S. from line Instructions] Advisors, Capital first

James Carreker

want give online? XXXX can talk your you for and thanks that about Double prepared a you little bit guidance, for Understanding expectations once don't commentary. all the the Hi, it's E to EBITDA contribution

Marc Stratton

what really here bringing to financing. spent our bank will term third-party which been capital Obviously, a near financing the reallocate sheet as we focus mentioned, in is the piece balance have appreciate James, small would question. otherwise capital on place, from

gross a expect do forward excited bring I to from times laid move project to XX% would down budget development by $XXX X Obviously, multiple. project we've E, here So project of is we're that the is million build We end somewhere in out about million. manner. roughly in about to And $XXX the contribution a that super very continues think X.X Double that. efficient of EBITDA The go-forward for the XXXX. the

I'm to think probably I those So pointing metrics.

James Carreker

beyond I know is of statements, accounting could you've $XXX share, but an your there write north expected in the question, downs impairments or this think And be is are announced? per I about helpful. already share, according any financial that That's XXXX value to somewhere book per what

Marc Stratton

that we on and where and the flow throw the an we the good and run James, no, quarter, are that those undiscounted feel value those It's based at quarter, every on analysis assets to assets is discounted flows is over our cash Yes, today. off answer very book time. something projected about of cash from look every

over today. needed. But think good value we very about we've I couple where assets, impairments the years, of I of So the our feel think sit taken they some last as

Operator

from is line Next your Markets, question open. is Elvira from Scotto RBC Capital

Elvira Scotto

are on Hey, great. for and good hearing really they're that What morning, everyone. the the Thanks CapEx, producers from public we're not they're growth. really increasing focused part, production most not

your seem there? may private you production. provide percent just then And remind the what color be Can customers are ramping it producer companies private? like does of However, some us,

Heath Deneke

across board, of public the well had price is probably exact with our down counts XXXX in side an have significantly the leaving somewhat the see think activity I think, out private than the are I fair weak seeing more at very environment And time. we across do we what the don't commodity the the would percentage, footprint. we're operators. that operators what do you in really that footprint. We outlook a have XXXX, do, are think I reflection I of amount of of But a I our think, the that very across -- as guidance, can but into I little again, private are to a we

I think will, slowdown, saw activity we lot just of a if levels. you in

that that I think back January, of XXXX, probably we more side. we coming probably head seeing in are to in February, now we private prices activity conversations bit say from and little And operators, the that XXXX. as as up having to But starting I'd have, are that commodity there's point rebounded the public certainly potentially that picking activity into some there's a the have of from more we see the well.

Elvira Scotto

my respect plans And there, do then, Thanks. takeaway to and how on they have are DAPL? were Basin, that And on your question is are DAPL positioned they shutdown? with ship Williston they the customers contingent to second DAPL? producer Do

Heath Deneke

Yes.

but anticipate shutdown So of do deliver we takeaway that would DAPL, the an shippers really footprint. long don't curtail in DAPL a our behind issue adequate that the just being production term there's the we pipeline, that, if think was there for

Marc Stratton

there, up interconnects also add, as might as crude throughout I pipeline systems base. by do terminals Elvira, the the Enbridge well we rail have throughout into

rail been we've one by that certainly And so, crude the came before operating in point obviously, And interconnectivity to online. Williston at had we time. years, well for DAPL in

pipeline terminals So to do out, well. we taken have interconnect that the again, extent alternative can interconnects that and were as rail into, we

Operator

We have and time. today's Ladies concludes Thank no more questions you. conference. this participating. you gentlemen, at Thank for this

You may now disconnect.

Summit Midstream Partners (SMLP) 4 Mar 212020 Q4 Earnings call transcript