SMLP - Earnings call transcript Q3 2021 | Summit Midstream Partners, LP

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Operator

Welcome to the Q3 2021 Summit Midstream Partners LP Earnings Conference Call. My name is Vanessa and I will be your operator for today’s call. [Operator Instructions] Please note that this conference is being recorded. I will now turn the call over to your host, Mr. Ross Wong.

Ross Wong

morning, good and operator everyone. Thanks,

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

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

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

Heath Deneke

and morning Thank everyone. Great. Ross you, Alright. good

and XX of new the the internal $XX.X So results which we results had this during have the quarter, wells been exceeded expectations. adjusted wells consecutive system well’s X of We the the wells quarter, X our financial wells crude reported turned million are Williston. third best Barnett the and third since million new XX-day Summit of online the and seen XX our really We which saw morning, and day includes X the XXXX in look, water Barnett EBITDA, The quarter operating the connected for in in a IPs that wells are excess on experienced have – in gas aggregate. play. of that first in

continued $XX enabled de-lever to cash just and of us the debt achieved $XXX EBITDA. which to brings us pay-down the debt ratio to with the end pay-down to year-to-date. total sheet That third the leverage quarter, quarter free utilize we X.Xx quarter, flow up also of balance another During under million million of in

forward As the we that to turn continue XX quarter, to of approximately we the end fourth in new wells expect are by the look to line with building year. momentum scheduled

EBITDA guidance to million a our the adjusted range together we $XXX million. now announced to previously to given year full be be or for guidance near So expect of – steadily end overall, results business the of with improving outperformance $XXX EBITDA that financial high to-date, our XXXX outlook

guidance to expect we million $XX come the of year end, quarter $XX have Subsequent was Additionally, capital to our XXXX we end range. the which guidance full as of range, priorities in development low advancing to furthering maturing well towards which in our top for progress the Double XXXX that the our included, billion two significant made E refinancing debt as of $X year, of Pipeline. was the million

like of details. to some and time made I’d progress we’ve each these significant As additional and noted in our some earnings spend release, on provide

and X revolver it’s for centered our we this facilities of employed on turning turning these notes. of cash end prioritized the point million to million a and marks of Since a really lien certainly new second around Tuesday, the new of credit $XXX we announced closing first, the balance effort Summit and refinancing. X.X-year, a refinancing, strategy The sheet have ABL debt So secured years culmination the $XXX maximizing a and of to XXXX, transform free repayment. flow position a for really closing

value, expenditures in we pursue this the base retired flexibility the provides unlocking improving covenant commitment top focus to With we to ABL million execute also the growth second structured our continue revolver $XXX lien while our also further balance entire are to that new credit enables cash and structure light us up to to together, providing we will revolver down reflects cash from to really that us have our lien as enable compared opportunities. of less us by revolver sheet well liquidity, to with going targeting the reduction sheet the free cash as our to additional sheet it balance and be more notes and facilities, underlying EBITDA, continue repaying transformation, towards but on The higher not generated this apply priorities and a balance operations cost an avenue we flow value-added really growing recently only way on ample de-levering to our which that And the second forward. are allocate demonstrated excess absolute focus up commitment flow, the capital effectively can going which This structure. debt focusing also capital think is debt. ABL we is on to

balance the mature were notes, which XXXX as was May scheduled able of proceeds of balance the XXXX to the to extinguish of XXXX. scheduled in $XXX facilities, well million which principal mature net as $XXX With of in credit the revolver, new was August million on the we to

any solution you maturity manage our kind a to delays our creates next until if covenant near-term runway, system. eliminates unexpected substantial downturn flexibility So activities of effectively, and development holistic our risk. scheduled refinancing around this really or refinancing X.X-year will, It debt provides of

E, to of Construction other to Turning continues Double our very Double progress priority. well. top now E

expect the XXXX are to of be the early as We potentially are year able to the of to in this achieve and quarter we as And October the November. million is during project. nearing that now pipeline $XXX end able mechanical we for fourth total, place of roughly service by in completion the pleased and in further of be construction, project we on of its are approximately are end expected to we XX% to project achieve announce which interest to to is Summit million able which $XXX net that budget, in reductions the now

be in contract million Bcf FT a day a Basin, including Upon of total that Double a its commitments X.XX the processing Double plants expect E Double a Delaware to Marathon improving committed connected service, over customer producers we the reminder, the very E export day provide some or which also Northern throughput E markets Coast largest desired access with initial firm the Waha several a really initial XX% equity As year Delaware value remaining asset, commitments, Double newest Double and momentum Double E million four the has of Bcf the approximately Look, These two of the region. day hand. the E step current of day commodity years. which in first E’s largest year long-term contribute we this following that that significant will period at we the and on a able trading expect originating commissioning, $XXX in Exxon currently around X are long-haul Beginning are downstream at will approximately throughout of a to million continue E Bcf in basis, rates, will of style pipes begin the be Upon interest with X, relative to capacity. in revenue of from production next Northern Furthermore, to day a service do an LNG roughly be $XX on will full of take-or-pay well, to under expect a most natural capacity such X.XXx. Double pipelines and Double Summit’s X Basin and service, gas contract Oil. Double it’s years is price in build startup to annual – Delaware in the SMLP. and by net commitments and of the to residual generate first as Gulf $XXX under and other region, to EBITDA of fully multiple would represents like, E active those contracts with interconnected XX% net fill X build subscribed the multiples and up will we would growing commitments, of activity in with on expect outlook, of E, we levels to take-or-pay available assuming market

expansion. build installation to a the subscription approximately day midpoint with if increase we cost – the initial that cost Bcf demand course, its Double system as extent future day the X just the that to the that of the this compression. multiple achieve of Bcf incremental capacity, improve a able would with And simply or ability well capacity effective X expand E very with dramatically on Bcf were a Additionally, of basis, to associated exceeds X.XX to the has of

to made to million pipeline certainly base ramp so from the Basin to we on gains see additional very customer of only as than $XXX in reducing about we that excited to are Northern not from and the FID, the continue years, original budget, just away more be the we being announce prospect weeks to Northern that the our we subscription service Basin the and look excited to able Delaware – it have grow operations levels forward continuing in our And very are look obviously, able we up. to coming capital being and commence put able by

over he that, and like call financial to segment hand go the So Marc with detailed results. I’d our through to will

Marc Stratton

EBITDA behind month. system, during later including X-well as in connected X-well XX, did XX connected had expected be and including on We production another the interconnect the from DUCs, of core quarter, a customers of of I over just morning the turned second good of feet variance the third a down wells quarterly pad third declines segments averaged in million March cubic due XXX was line our segment was during that pad million XXXX, have with cubic XXX which $X.X that by the and SMU to the adjusted Starting or with from largely discussion performance and Utica day million, to Heath feet areas. Shale, quarter Thanks, the the million our am begin the around here system financial $X.X was in The X totaled a our new this wells to comprise going Utica the TPL-X XX% of is everyone. which quarter quarter. that September natural focus averaged day XXXX. Great.

For connected that which our our with volumes result providing behind $X.X segment, result adjusted a across in system. turned as wells system on the Williston POP really wells quarter that a to third system. notably behind connected XX.X% the third quarter customer Williston system. were awaiting favorable quarter, the third DUCs second decline XXXX, the quarter, segment incremental by more adjusted the than expenses. behind XX were that a a volumes in X% system do $XX.X contracts that we end quarter first was X X volume operating our of and Ohio approximately behind primarily wells liquids line of increased X all the Gathering as lower in margins primarily the be together quarter, a focused We mix, XXXX. lower totaled of have million OGC EBITDA the in million and new are for quarter, of approximately on currently second increase of totaled expected completion during from have X% EBITDA liquids

compares to XX this year-to-date X September through this connected year. note, wells to Just of

matter third a XXXX to million in during the to totaled $X.X legal settlement DJ a the quarter, from of largely here a to the $X.X million quarter quarter. Turning related of benefit adjusted the a increase with $X.X segment, EBITDA vendor due second the million

had well averaged a system. DUCs Third the September was feet XX third and connected prior cubic of volume we to with as line DJ the which quarter million volume new XX, quarter, DJ in We during the the throughput. did system the behind X in quarter no day, have

agreement. currently And are the in to change through the improved Basin third-party discussions $XXX,XXX and due last segment to quarter, focus we areas: offload a EBITDA utilization increase the a product volumes the system and adjusted for volume the Permian a quarter primarily relative However, core second approximately totaled our slight in long-term customer in third with margins sales increase now, to mix. of

party system, quarter our quarter expected to sign no is including with the we were new over to year, feet the with cash offload million Obviously, wells customer, and and and Permian be a commercial into agreement flows a XXXX. of to is our did during a going multiple to fourth a turn the quarter of quarter, planning the new then third new X.X to day new four higher catalysts, Although volume these in-line fourth onto who up improve, segment, recently this expect forward. first driven the new third wells gathering agreements course connected with see a this we in there who agreement processing in separate utilization cubic of

of and third adjusted EBITDA million from the then flow aggregate, those for include legacy in aggregate $X.X And Piceance, segments. based free million the That’s million Our segment which quarter. cash on really $XX Marcellus $XX.X segments, quarter. the generated CapEx in of of areas, in Barnett

mentioned our in Heath earlier pad, no As CapEx gather seven required Summit volumes. new to they an order turned in in these September wells because on virtually which, the located existing anchor were customer in-line new Barnett,

wells on the development outside program where these since system These XXX so which next fourth years. nine Piceance So the of our new could the aggregate, Piceance, quarter. in-line nearly the Barnett, over some second fourth expected we’ve of larger during be day the million say XX look, year. in representing XX% on Further, turned we to is based finally, area volumes generated year, XX up gathered which of first turn then conversations, collect the contemplating incremental wells the of line acreage, same in seen, a located quarter are quarter behind one the we new customer – production, across this Barnett activity this wells result customer be to generate the on productive several the in wells In over the drilled these in would I’d new on for new this really are is MVCs, most cash will XXXX. in multiyear same segment. here the four all Marcellus wells of feet well cubic are and system, customers wells And expecting of of acreage flow to the a the our Marcellus ever

of Summit Williston Now million higher The million CapEx. million $X.X just of $X.X third reported million, totaled with growth partnership, new pad million. turning to of associated of Capital included $XX.X net third back in $X of third of Utica than quarter for EBITDA income the was quarter, and maintenance adjusted $XX.X million the and was the second which connect quarter sites expenditures to really $X.X our XXXX, quarter CapEx and segments. majority DCF capital

year and quarterly obviously flow The E’s on that borrowings year, Double on $X guidance to a each Summit in be E distributions, which E be to operations E revised basis, that of wrap quarter, for Double wanted financing end the partner’s in third to service principal be used outline equal our by partners the lower for has entities towards CapEx equity. to expense, cash proportionate in contemplated to unrestricted E, to detail. amortize this interest ownership. the balance all in Summit another the in calls have year. project its be Summit we will range During up million with A more the will balance commence this distributed based make credit little interest this the facilities flows expects Double principal Series at quickly and XX% later subsidiary generated and E, amortize to will contribute Since and preferred Double Permian XX% to the Cash debt, Double SMLP and the its finance the is construction, are cash Summit interest, distributions, expecting to I investment a of Double the of our funded to under approximately direct transmission. E its of Double capital non-recourse

As cash is you’ll will we’re its back opportunity E mentioned, of had under finance Heath outstanding the revolver over visible the repaid Double $XXX total have Series limits, capacity – that the as outstanding costs. flow the the hand, the on point is at Effectively, the in put where at over situation the covenant of recall, balance SMLP de-levering end balance SMLP finance place SMLP’s of revolver unrestricted E third billion equity, this to our quarter our years as A liquidity cash approximately some we sheet, as to subsidiaries several million in to construction at preferred thing, we And $X.X our Double respect doing $XX hold million sheet, on interest debt E, a under equity free had is the with XX. we in several project $XXX doing years bring With and million of same the debt million, next next a during creating the the generation. share years, XX. balance with over subsidiary September sheet. X $XXX.X and Subject totaled to Double past available quarter September we borrowing what

Pro notes, XX the accounting remarks. letters our September of commitments a compared September Our ABL issued Revolver to to total turn $XXX call approximately for refinancing after a compared availability over forma XXXX limit first under million the borrowing $XXX maturities X.XXx base of $XX.X Revolver, debt for approximately lien undrawn and closing leverage as limit total maximum and the lender XXXX outstanding X.XXx And leverage X.Xx. and including had to of of compared totaled redemption of credit. The I’ll was SMLP $XXX ratio at ABL completion Heath the maximum to XX million. million was X.XXx, million with that, of of transaction, of back the million $XX.X on new borrowing its of for

Heath Deneke

this third with to and Marc. credit be certainly flexibility, maturities, the you, milestone financial we’re pleased business Look, refinancing, the to facilities is to our XXXX quarter maturity our maturities, to Again, the a effectively. place. for Thank in transformational refinancing partnership, run new put the able very both we recap, obviously, providing debt close really and are our profile, of and performance, excited

execution, maximize we pay preliminary friendly Utica price down are and really that finally, in reduction. to And new free you excited we’re a XXXX, have debt, the And as flow, overall at early starting that we continues of staying when We’ve arrangements various the very commercial continue backdrop. from view, but are continue segments. near-term achieve step well indications, manner, really if Permian, to, the commodity we’re too to to progress particularly project and look still timeline. and below E environmentally top-tier have increases, – cash encouraged with ahead very the a signed proud to we the to or Williston, by alluded about. we’ve within to concrete customers we’ve strong it’s materially way some seeing kind team see will, we been impressed the leverage for and project. to they expected I’m safe every overall project able of Double budget While – been and progress have the the their in while and

execute We lot said, to But view solidified forward to encouraged I time to Look, wood get a have next XXXX. today. we’d chop, now provide and strategic with on for the to far. plan, look little what between updates to customers look continuing more our to like year, as seeing you on thank with thus producer so future. early and our we’re we of a continuing to to, I forward forward in look your working we’re

So for open call like to with I’d that, the questions. up operator,

Operator

have America. of our with question from first you. Brody Bank Thank Instructions] Gregg Please We begin. [Operator

Gregg Brody

color. all Good morning, Thank guys. the you for

questions for here. few a Just you

what Can Some – you of you it on there? realize to better – sort able talk margins. about to been Is of you a going able that your little you businesses, commodity there better mentioned driven? what’s Is mix. bit renegotiate were have talk you contracts? Can

Marc Stratton

who array good terms Every and that the more have with mix, a is when about unique Hey, obviously, gathering are morning. this higher contracts, volume. of When representing larger share those overall we favorable of so wide one is speaking. a and Marc from rates about we already Gregg, gathering Yes. should what talk mix, Language] customers have away of different customers take footprint. have you we contracts rate, customer diverse a higher [Foreign talk operating

Gregg Brody

indicating activity. increased you Great. in you a what where more Can And to touched terms then you are are optimistic there, go for a into or you of bit bit your on about activity? little detail next – year customers

Heath Deneke

Yes. This Heath. is

in we So, see in I call. about of early really Bakken, quarter are the we to think on, on talked some have particular, activity it’s like right. starting some we it’s pickup first have what still certainly in should the is early and but calls, observed, to prior in

I $XX matter to crude not are economic across obviously in environment. are $X gas those think and a drilling all drilling price of $X It’s at system processes, environment economics. a our right. Literally price locations we

see to of how, are E&Ps new have invest, be dollars when the Utica, ultimately, budgets outlook. not generating to – economics those particularly shareholders. And and de-levering you to very is like. commodity kind out. look win been at Obviously, in it’s what difficult to put and producer think to that are wells cash the a the flow, free to waiting and going make Bakken, type returning DJ, ground looking in focused Marcellus, with Permian, and we balance of got decision I are sheet, the what the are think the public on, I particularly But

mid won’t unusually it’s think our producers firm not first enough late in plans quarter. development from I until – typically get we So, to the

have XX quarter, we the how XX – connects we for we in Bakken, wells are we if we kind of wells year what fourth up quarter trended, quarter, the just is, So, this had already got had example, to like seen mid-XX in more we come look third I showing in all along have and year. at signaling of scheduled think well next we first the have have for than the you in

about think position to all end But to to probably color producers programs that more in give I will but good budgets, we of want trends, – a we pretty let it. the before their the some year, comfortable probably together, So, the forward first towards the get are being look first feeling quarter on capital the it their data we be feel we releasing. have that and

Gregg Brody

about And just you private what I some curious timing? operators, of then same the your And if…? would am expect

Heath Deneke

yes, say, now. I Yes. – I we mean I lot mean are discussions of there so having generally a speaking, would

are just getting of everything at not is like are we So, higher settling information point. and It’s environment. people not pretty any it’s fluid, this this into still kind

wells then certainly probably making to we private putting a the little guys to the are be decisions economics at to the work, online, around bringing more quickly, cash are basis. guys new I would rigs given that sentiment private more just producers looking public say, they would expect free and going generate and flow, move on So, and just public,

that our diversification on private operators are we also talked benefits is public not to, system. do have yes, about but but good exposed – think that other the slug we and wanted we have that I to of and customers basins we So of only a I wide a of mix –

Gregg Brody

And have then coming more Great. mentioned you, is in below you Double E one just budget. for so,

Heath Deneke

Yes.

Gregg Brody

on of Where you how you to whether think pay the And And distributions how the do – for transactions? a when term loan repayment will that pick you this are as you the day? you the about a do from amount that? you the expect – drawn complete allocate feature be, receive the you preferred,

Heath Deneke

Marc. ahead, Go

Marc Stratton

Hey Yes. Gregg.

expect term provide to So, amount to place how I bring get tried about a loan in service. it cash do full little is here interest. be we summarize to fully and the just Double $XXX will but going We if E in here. earnings Double of that would work detail to E let we Cash Obviously, partners. there million our utilize release, from some have finance to flows more in XX% that me see distributed can its

term We to that the not entity residual and million that loan. Residual up that where be be service cash, amortize the only will sits, to cash distributed an use residual – amortize there balance cash interest those distributions, equity. then will will will subsidiary principal Series stated also cash, used the of that and $XXX and to then on equity the A pay cash distribution be will pref, preferred cash beyond flow XX% preferred that that down but

that if over distributed be And as will, so you as de-levering credit you think will several the about it, E. next years chain, Double cash is up from

Gregg Brody

heard that’s helpful. really I and – it’s comment your So, opening

loan, determine be down not outlook? to have term but necessarily them once the to preferred you will pay to pay down would – you Just debt, start you once what achieved your amortize the

Marc Stratton

piece higher That’s credit obviously – a Yes, it’s of it’s a chain. capital right. in cost that higher

So, that incentivized will motivated and be to down. pay we

of mechanics just it works. that’s how look, the So

I a on chain we next where the that as we opportunity that be key de-levering will is a several are value de-levering market market the the It we in a our if the I at regulated another will commands pipes other pay dollar stakeholders. its E, that that’s preferred either how de values, have is takeaway recourse to situation SMLP’s current of dollar whole of credit over Creating visible equity think here time the scratch the balance down credit here, same the sheet. Double long-haul is of ramping recently. about equity would asset. not minimis down, is Double around multiples, that asset, it just Every as that of is to E and SMLP credit a kind that dollar its just of that of value and you accretive on just we an heads every interesting, subsidiary little E think Double our included truly that Double Series very sheet that about E it value A asset as up in bring in included would we have cap. manner. or find pay debt appear add, I also particularly years accrues and balance facilities it you think

Gregg Brody

pointing you And the it of a would sort asset. I are appreciate Is disconnect. somebody…? out something you consider divesting as value it’s long-term

Heath Deneke

I mean, certainly mean, we look, priorities I I Yes. our pretty clear, mean, – – are right. are look,

looking also sheet. top And the growth. on accelerate will we focus to of are EBITDA We de-levering line balance kind

is your that value was to thought point, But but base of certainly at case, company, value of a something mean we a when do assets drive. additional EBITDA the kind look – we reflective and It entertain obviously we that I So would not is the you the of someone the color would if the and look that like but you it it. we just the offer work. the and at here, a comes provided what notable. it’s in pretty bigger take math it, equity on

or being today, the is You much could Double at than in is value probably what our just as market right. – more equity Double E look E cap

bit would are would and sure are to looking clearly there do. what that, we really to and looking So, if at understood, be just price. we is look a make focused the our we nothing unit that – economics But was eliminated yes, out on valuation is that proactively more

at expanded then what the kind sheet. that eventually most is to that’s think pipeline long-term base And we get kind near for of the subscribed, goal, the get and of potentially value to we subscribed, fully balance drive this into Our think will capacity long-term time. goal, and the some the case, rolling

Gregg Brody

time the helpful it. for you Thank and it. answers. appreciate I Got

Heath Deneke

Great. Thank you.

Operator

at questions this This for conference sir. in We time. further have And thank you participating. no we queue gentlemen, call. Ladies you thank thank you. concludes and our And

now You may disconnect.

Summit Midstream Partners (SMLP) 5 Nov 212021 Q3 Earnings call transcript