SMLP - Earnings call transcript Q4 2021 | Summit Midstream Partners, LP

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Operator

Good morning and welcome to the Fourth Quarter 2021 Summit Midstream Partners LP Earnings Conference Call. My name is Brandon and I will be your operator for today. [Operator Instructions] I will now turn the call over to Ross Wong. And Ross, you may begin.

Ross Wong

Thanks, operator and good morning, everyone.

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

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

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

Heath Deneke

our earnings Thanks, good joining you morning everyone, call. Ross for and thank

had lot to year. like by as on off XXXX a throughout going I’d we of a start providing recap certainly the So

the $XXX year of nearly original top million $XXX our EBITDA range ending to reported $XXX end first, guidance in million, million $XXX $XXX achieving guidance expectations, midpoint adjusted at hitting many their our to was economic exceeding some recovery. tailwinds Summit original full customers the hands the year cases million This from the million and effort XX%. cost general of So range of in an exceeding and control, commercial by on wins, all

XX this As in a on XX wells, that hopeful assume to prevailing reference are commodity throughout a year we systems. we the activity elaborate guidance XX our environment ended the we and wells point, will forward wells further XXXX. added But few XXXX original price with to progress continue the to I’ll minutes. as pull

that the so do November, XX rigs We northern pipeline established Mexico for With very very budget original Double and New the safely we in and original the near basin. FID. also running was for in critical long-term below $XXX E outlook today, were successfully this million pipeline system nearly we’re and the service gas in the excited placed Delaware able about XX% approximately in to new

market. us debt needed our billion our reduced preferred ever believe, us the $XXX we the and from believe an unpaid below dollars distributions equity to which sheet. of leverage refinanced important preferred of preferred unlimited nearly evolving continues that equity for will that we that maturities million, years. a overall the coming series balance flexibility $XXX help strategic in into issue in oil also capital and future, We uncertain parity due enable in of These reduce tool accrued structure us we’re with value series distributions which and over million eliminated exchanged over equity of million and transactions to face A we accrued that gas $XX financial coming common the XXXX, to an Summit our a We be provides navigate will

and placed this that that result capital multiyear extended provides recovery us and the structure to expected pressures certainly upstream recovery U And the on recovery with our shaped economic customers extended a Summit. We would opportunity runway for an for occur. in

Let’s into dive guidance. XXXX

which wells, Hub low is three are historically averaged XXXX the behind the be based a which off, XXXX limited $X below guidance averaged developed XXXX, when pre-pandemic well XXX our range given with and systems year customers’ average below wells our below plans we XXXX $X the that WTI activity the time in to a we our XXX second in are approximately we’re to flat certainly price XXXX. of First year, downturn, per as environment commodity Henry we levels the a the half and is basically wells experienced that new new of amount indicating of XX during on turned of were morning reminder will and or online that experienced activity barrel. during momentum this during and disappointed approximately announced The latest we very earlier and

increase behind the time, and compelling and we balance that our strip believe virtually position over very in be gas of system. all economic improved old industry a $XX a high activities, north years to At now of a our our will we’ve remaining price seen Furthermore, what approaching good barrel much and develop. restructuring their are development systems with customers $X of above believe the per MMbtu. one these and through past we couple discipline in Henry behind of pricing on environments inventories combination and spending are strip return sheets capital consolidations, to have opportunities in financial of now fashioned inventory WTI best the that and obviously Hub $XXX commodity crude We’re capture better levels, capability quite the to significantly some a

investors an generally companies. continuing as equity holding some upstream production are continue bullish to buybacks grow producers for even price understand healthy we’re we production environment sheet continuing development the public begin the case producer balance experiencing time and as commodity that commodity values support buybacks cash budgets is up, flow have price expensive confidence appease Look, to balance to We is are capital private While strengthen now These high. they will And shareholders factors support are progress free a certainly result, make compelling generation despite a continue year-over-year, all that forward. nearing and that, share companies we outlook, these think to the the sheets within place via as among fundamentals theme by things a to improved we into significantly. XXXX will a that and restraint eventually more going further fundamentals to return gain continue but I to to increasing that certainly and distributions. hold, flat mean, in think

to Rockies. Now the some off add commentary, in level segment let me commentary, start

majority currently environment. what behind XX and by historical that being in Well, XXXX we’re wells to divide liquid the activity and in be in pricing is is the the would them XX we levels segment private primarily new this So, this levels certainly below pre-pandemic expecting are for below producers system. to driven expect of Williston Basin well

this located wells seeing our in footprint to continue XXXX. region. acreage XX,XXX with excited since westerly acre close in growth talk for in of and County, online Worth a results and has we our and continues dedication Bakken year. to new new Fort a producers towards to recently to volume dedication XXX the secured having More in your I’m be acreage in also customer Williams becomes broadly, in delineated that divide the Williams polar shift Central been significant nearly be as that We this announce particular could XX we as to think last further pleased We the a brought are Mackenzie system. deplete activity new inventory with County, about XXXX within catalyst Southern proximity

activity Moving systems is, to highlighted behind very our DJ, in this to recent that basin. a attributable we consolidation the that the that in the the thesis impacting little restraint is We earlier year outlook I think the near-term XXXX. another a in is think or But have factor producer our call. we largely activity is in plan

acquired that large acquisitions XX the months. company scale anchor of DJ past our the was by over One year large consolidate basin customers recently five a completed last effectively to has the in

we as think acreage the which as making we term, on improve longer pick wells Piceance, progress we will populated The processors successor hit areas years system them its near-term, in While within activity had the back fully DJ come the us on quarter, other the DJ development appears We expect DJ. position. on wait online in development the and in this in that with wells company near-term areas to our return expect footprint these our net more agreements get on on be really to offload developed. focusing up to our more our represent positive the the can Quickly be now. to on for are first outlook we help during three more a nine acreage densely that than the footprint. the activities area dedicated we fourth within But activity to do development

at to In this natural very pricing in wells XXXX will begin the longer customers customer far. be wells to in best for believe to four the capital for seven for conversations systems that the a with XX we could remain online gas the connected wells XX behind we optimistic agreement wells system be having and long-term XXXX for least XXXX active system we would and second to are wells reimbursement activities system we to think we that up slated have XX continue our We in Shifting responding the outlook brought enable planning were Barnett, And to our performing XXXX term a And expect behind half. another online prices improving additional in bought timeframe. into us environment. wells Double the the Permian, The recently thus XXXX. E. in entered with are that another have to

the transport from initial from Texas. pipeline E Permian X.XX Ottawa, Lea continues efficient As oriented expansion area. that largest is production production growing Bcf New placed to in in to County, in natural Bcf a of originate ramp we’ve an one a Double reminder, Bcf Basin, Eddy Mexico very and Gulf of for the pipelines anchored well day up or capacity some service contracts incremental the day gas highly producers with a in to Coast of and multiple a day with interconnect by is two pay positioned as long-term, the a take to

that customers Double up ramp secure between or contracts incremental our significant XXXX takeaway a of enable day contracts growth. for pay XXXX. from Northern We new will catalyst Delaware as production take E Bcf growth be and Summit, need we initial is a expect And gas to capacity sculpted

private Our when to The our impacted up are the activity ramp activity in We of adjacent our developed future. position our activity this and continues acreage deferral this timing the of will in by but encouraged to that offload producers uncertain, be find dedicated be expect remain scarce as its system customers’ beginning more that Permian some on customer of will various our to GMP system levels. through to volume by capacity primary thus see footprint. area we our anchor becomes in around to agreements do processing way

the system well development in be footprint. connect and successful planning to XX Northeast, is in we environment. our XXXX. in well This record that activity driven activity XX XXXX observed systems. in significant we the behind new the restraint the customers is that that lane area here, performance attractive of achieved in price have and with spite Utica and for despite gains are to this And believe and lower that in that beginning contracts we and around relative see improvement to securing will longer that techniques, other of we in can and through expecting new gas highly also approximately completion be out wells this thesis laterals the play XXXX efficiency expected are each believe XXXX this then currently are Again, producer which in is We returns finally, we’ve XX in of really the

behind customers significant Utica has our catalysts system Additionally, the divesting acreage the several virtually And the position This in could incremental in indicated its in coming years. inactive interest their Utica development basin. customer our anchor Northeast in segment a one SMU has really been primary owned acreage the sale in wholly years. this publicly of future the the our in become for past for activity of

provide him call the hand to to additional financial some results now like Bill outlook. I’d over that with to and details So let our on Bill.

William Mault

good Heath morning, Thanks, and everyone.

our we’d I’m be say mentor really in maximize stakeholders, also all I’ll years our like serve six to new the First everything responsibility. Mark thank helping over And this as to a off, important to for like on a do excited stakeholders. good and my Stratton, CFO. value to past position friend continue to take I’d me to in to control that

our by As adding Heath mentioned, followed year, XXXX we good our performance and quarterly more little had by discussing a I’ll a color start financial guidance. on

quarter, a by average XX% which million day with is Ohio segment a joint matter barrels the As XX,XXX in that of our you segment align the which system. totaled day from of barrels with our million $XX.X in of XXX The year quarter, SMU Double third during adjusted production natural online, and Liquids day which decrease another a of during quarter. adjusted our And to business was behind due pipeline, to was million slow wells currently ad commercial as from average quarter primarily X,XXX averaged that which third the quarter. $X.X of November. wholly inclusive declines system, only to all was which XXX a our $X.X how relative release, connections a gathering well OGC docks, approximately gas The natural volumes settlement third Marcellus and million directly decrease prior day and Northeast, have in million, X.XX $XXX trends XX EBITDA and a vendor wells juncture million line in connections the of legal quarter. our behind to day a partially is for volumes an wells connected represented impact which represents internal a XX due systems, Basin XX. a we natural This have earnings beginning related offset lane our in day relative docks XXXX. is EBITDA the the proportionate million reporting day, hoc were DJ set system of of owned XX north No to due expectations, our volumes direct a we E Northeast a but day, Bcf tend by behind XX a GMP at segment million the into the X wells wells per system, is the wells Double segment new to basis includes while averaged with the quarter out Permian largely segment that the from Heath during wholly commencing pipeline $XX streamlined The noticed of of the our bound wells and connects and was interest volumes on of a oil Rockies due Utica expected on macroeconomic operations. a during with XXX EBITDA currently system, third by XX day, quarter, approximately down have adjusted a may segment, share how calendar that our to were our is behind quarter. $X.X of our we better venture down new inclusive of declines Basin represent our yearend, million $XX inclusive by our million, to of we has the represent our which partially which areas variance were $X.X which docks in in four online of system quarter segment online manage quarter, starting of representing connected November this to third and the XX E which These Williston our The day million GMP averaged already our third behind year. asset The offset has for on that of million expect late owned XXXX, our million crude well million, was well system. primarily GMP XX% GMP increase largely Rockies million XXXX. IP benefit the of the quarter, brought which $X.X day, connected four expected IP generated system, four E quarter. versus of flat or The our XX% operation in Double in the Volumes reported our

existing we through As our Heath development to agreements. will volumes activity significant incremental expect mentioned, adjacent which offload there in result system, are

dedicated very producers area, acreage which some two permits new to private today. recently the drill addition, have was In in eight sold active active

We for and hands get encouraged plans development continue acreage active beyond, of to but discuss the this XXXX potential in by customers. more are

are encouraged M&A at value our over a estimated to to like the times. pipeline getting Double transactions the signal intrinsic accrue is deal we multiples Lastly, XX that this of see a GCX half the strong think E We and done stakeholders. may at

relative in nine the Heath in $X.X no we This our third summer. million wells quarter to XXX quarter. the to system $X was day, also three As of of but the of equity the currently, The ourselves expect strong our averaged million we which of one we we unrestricted due the million Volumes the as XX% MVCs which in. outstanding came Piceance $XX see outstanding as over natural in preferred increase $XXX interest quarter, to $XX.X from relative offset EBITDA in day day, third the and environment of capacity the and it’s million $XXX wells to million active quarter, segment mobilize wells reflective XXX years. E an pricing quarter, that at and the that behind million to in a full there brought online which million, dark XX generate million subsidiaries. relative had fourth system partially of The Double over and of expired a million X.XX debt basin during late commodity reminder, wells drill expect on a first reported third reported of spot down yearend, plans XXXX, to quarter. EBITDA XX NGL Bcf of were adjusted due at stated customers EBITDA initial SMLP wells the by in slight new to million gas mentioned, approximately increase segment are XXXX September, customer This Barnett to in volumes has permitted million, is third primarily $X.X during increased and XXX adjusted $XX.X online to of day a a seven of rig a for

are best of these implementing today of million X seen today into of DNC are after improvements technological each ever million Heath we’ve direct As were mentioned, wells on system, production. and the about their each X three today around These IP flowing wells producers are programs. this wells result months and a the as

which wells decline expect the four of low as are has likely we docks There Given Barnett the of behind the to written LNG system and the export a street end the system, additional are our off currently development prospects proximity the the the Coast Gulf natural excited asset. the for PDP at gas that prices represent range. and guidance about we all market, behind

Permian continued in we our recorded of a quarter discussions primarily to However, quarter, sell. $XX.X $X.X totaled $XX.X million The million we CapEx. in Quickly that included part may a of with have of have inventory free third the quarter connect the new was the to to high EBITDA down during and net or an our maintenance flow higher systems. cash our wells corporate quarter, pay impairment and $X.X the which sold of quarter permitted partnership, Williston with and million the the are focus the end reported We latent sites associated active fourth loss inventory million. million This included and and $X.X an we initiative guidance seven on is due of million for customers certain range. maximize that regarding management expenditures debt rationalization. Capital Utica, on SMLP capital CapEx in additional the was during majority than pad through gross asset $XX.X of adjusted

million will SMLPs SMLPs repaid million ABL During quarter, the of Summit XXXX. $X E generated balance cash net million we thus into during we majority satisfy $XXX to Permian With Holdco, will flow investment of the believe sheet, far respect free an in also we invested we in vast remaining XXXX. million had Transmission debt outstanding and facility Double our to-date $XXX under credit with $XX additional have which

million, end $XX.X of available capacity totaled approximately which $XXX fourth the the LCs. million Our quarter borrowing at included of

would E, liquidity the a out those costs repayment expected to fall close which addition Heath’s year. some LCs to in add increase we away, amount As throughout like detail Double on the we remaining of comments debt our at will guidance. to expect I’d on significant our XXXX that, With

range we timing And risks of hit our few rates guidance even IP the discussed customers midpoint provided. The the oil connections of have by IP to and a end and relative As high customers that risk resolves what targets. further. their low assumed timing end year, the months last

prudent for our upstream sheet already methodology given planning, customers the to balance continue to. alluded a is that believe expectations and setting dynamics this impacting Heath We evolving

for moment. a Looking backward

range, above we our outlook few Our regulatory expenses it that outperformance midpoint certain on to the our asset our integrity We one-time stakeholders XXXX XX% of but we result $X similar and And informing decisions rely included benefiting million was and that experience as XXXX, related of us points. today. near-term it of guidance. SMLP of making we a operating see in our In XXXX final guidance from A the initiatives. when pushed a their nearly customers targets. hitting original tailwinds we tailwinds of can’t hope handful

years reduce regulatory CapEx SMLP range. $X in and approximately there’s and mission our for that well We ensure many addition, In better will are upcoming included believe changes, protected investments of similar our our for million profile assets position expenditures to maintained maintenance come. these CapEx

in to combat We pressures. will to continue and control everything inflationary control on doing focus cost our

attractive We’re over as growth that also the progress back And things to promise risk Heath for call laser our we always, as the return I’ll all to year. an closing throughout investments for adjusted focused be on stakeholders. transparent generate And remarks. turn with only that, making will

Heath Deneke

Bill. Thanks,

the potentially recovery the We risks we established really which shaped that customers. they and to so time. to it that So into refinancing a the across look, the would our multiyear indicate that XXXX to allow runway the strategy, anticipated continue levels limited obviously do disappointed first recovery be latest by commodity And for U again, and prices and recover the remain we XXXX and we will our to quarter we for really occur strengthen year would systems. believe that we fundamentals was ensure driven that plans while result U could that was business But that objective particularly for and would us key Admittedly, would optimistic allow we’re that of activity with was were, trough by our lengthen that timing, strengthen we will year expect XXXX. last shape for as fundamentals ultimately XXXX. the for moved customers’ turning and continued outlook Summit and in encouraged back that do that Summit a And over this activity that to timeframe mindful begin in year. its certainly of a producer and however, into up and

range. year, will accordingly last cash the outlook the year. case In company we could we everything their extent the later And our for do levels be our maximize and different continue and stakeholders we control our updated debt, to certainly going plan customers free to the expect meantime, was see increase to initial down materially provide the to we in position and XXXX success As forward. will guidance in pay guidance than the flow, activity

customers. to our sustainable will safe, efficient, and operations We reliable for also continue provide

continued and with environment maintain safe I’d everyone time questions. also I very work up and for for that positive like employees We call open to our And operator, for and to contractors. a like the the our thank support.

Operator

go Carreker, [Operator Instructions] have James From Capital, ahead. please US we

James Carreker

Thanks Good for morning, guys. the call.

wondering any on in restrictions have latest Just new outlook the does leverage financing the affect this way covenants you place completed or might that any that in last been debt year?

William Mault

thought covenant a think Bill. about No, and a minimum that the like putting refinancing coverage James, a place key lien we about package is really of package two being in covenant interest really package then was limited and secured. the as and first this to consideration times really

about that guidance on XXXX. times half the compliance leverage a with a two of max and the we of think based those So ABL, this of and throughout to range, both expect be in course

James Carreker

the And thinking were or of remembering, broadly then strong lot built a maybe just systems with MVC protections.

of declines? is to that? bucket that any kind thinking kind So I of rolling production of is Is way is much How much that kind of MVC guess, off? about the decline of year-over-year, how there

William Mault

sure. Yes,

James Carreker

XXXX Yes. beyond? does guess. situation follow look kind The what I is that the and MVC of, rollout like up to

William Mault

I no, guidance. MVC within would Yes, point that’s on that focus payments our a kind And, of question. you shortfall section great to,

track to quarter quarter. the million that one the of we $X.X a quarter the Piceance, the the at the particular third MVC fourth notice, third you’ll about in had from of kind quarter, that that end You was basically over expired decline

roughly $XX that to million So from XXXX on decline annualized a of think as an basis, XXXX.

been $XX worth basis, primary year if And about how shortfall in we XXXX, So And for table, of our a in think three that’s had last at variance or million the years look you of payments. is, that we’ve that year-over-year. I describing over is, full think that of kind next MVCs kind four until generally call call that, of it it effectively $XX the million reductions expires, XXXX.

James Carreker

just Double that’s maybe if the kind on for of half guess I I one, think Excuse that’s throughput helpful. just XXXX? I any fit another And commentary just is in why contracted then curious. E on maybe about could me, maybe And outlook. like what

William Mault

contracted would lot November just those reminder, day, the $XXX XXXX, the of that expect averages, dependent, increases a in as capacity that existing operational such a of of a one November, And the perspective, course kind a we closer a that is million we to day, which became by Bcf at going to those that year are from sculpts be one. start approaching will usage is look, be year, pipe contracts. ramped the fully the and of Yes, in throughout annual contracts

And, do producers leg there. if running do at they the those bullish So, we’re in day, the contracts initial as that that to That’s Mexico. And contracted of think now. on right in XXX, a rigs seeing I million in fully an ramp they the around $XX XX you $XX expect activity we’re Summit. plus contract Bcf asset kind mean, I obviously, existing a around out was to EBITDA expect prepared mentioned, EBITDA. very contractually. fully my be about And going we planning. somewhere I why to remarks, think we’d net million to ramped, New that’s to of rig at given that’s part profile expect the

Heath Deneke

XXX% pay the reminder, these contract. Just about when mean, I we type as take a talk or volumes, E and Double are virtually

walked and with builders associated revenue demand on very contracted throughput. It’s So the you there’s charges through. all really based just little capacity

James Carreker

XXXX? we’re excited forward, I would And as one reinvigorating indicate you’ve would curve? level look more. What some you that early I you producers there look almost guess, what U optimism as that in growth really guess discussions got about the E, Double to have area are we helpful. That’s the of I obviously with just rapid guess,

Heath Deneke

long their main frankly recently were delivering about drive I just very that me XXXX. been trying as to figure the frame lot we not active frankly $XX of we’re outlook economic that wells, north of de-monetize to our well environment, the I drill. position there’s Utica. would to be say we call price let of it No to that their really the We’ve we they’re what’s Yes, most get good XTO, a, breakevens needle has the I earnings obviously, in a mean, in customers what basin frame on acreage call. out that we wells. of vast And people and for north a of Utica system who some pricing the then we so a Gulfport, of the was have stronger shale, that out who would in for there of surprised crude, in kind who’s monster and I’m Where the them. and three got sure $X that into would that didn’t majority been not it next been about public tried just returning certainly that’s and has we’ve you see specifically at as ascent, say, behind in kind the restructuring, level, came beyond got in very US desire just think that have it,

three two not of say our of the growth both have I’d in driving system. the SMU the behind out been been the ODC So, and systems, volumetric active our years since most past couple system of

prices right were when now we’ve more prices plus. well look, where are think, seen XXX. So seeing what we’re activity And XXX I

So be think just to hey, people that right but anywhere there’s not next that the are doubt to of north look that if comfortable economically, going the if in get you prices fundamentals three years, $X. out now, no four I over

I plans. us, I that say, and desk, think up three the drilling customers won important successful for they’re a significant in very step support should and they’re position. that XTO monetizing would And basins if development if

to that can think getting position years back I be come. to for someone into stepping drilling meaningful and very

heroic, since for not activity. probably, say, up as right is that reservation the Williston. anyway, now, or or see after We producer I and Fort very our bankruptcy during public there private very active So have guys online private after whether it’s they’re most the activity we’ll bankruptcy, for the out during right wells projecting of on would anything I put that September the acreage, was drilling we’re footprint. they we’ve very just high, They’re of economic, it, XX half producers of, Bruin but not now. it highly in that our a up drilling not Berthold large and continue say bankruptcy. should a our anywhere muted healthy right plus call it inventory that the XXXX really from the of acquired had guess, Utica we’ve are I’d they doing I there, second to, say XX come back there expensive the side, out not or kind wells got I’d but into come that’s support, range, area, got set when customer

And double, So, this that were not in just all price think that triple the should levels and environment. to where that sub was we at say, connects $X. would the get XX same if areas of two I kind basically I gas think those pre-pandemic see, them they sub probably are the potentially I’d well

which segment, have So, the now economics, said, anomaly those call or we our is say, XXXX projecting just but, of, is is are that area the given the the we’re Bakken virtually the other virtually wells is activity means Rockies we’re which DJ, and in the as of of one two, DJ the in we maybe all Bakken, DJ. all in in an two the I’d the kind

there economic Our are for two primary which had have think we’ve I’m on. and highly acreage certainly And, this to think per prices. and know that support customers expect many out we position. rig the step year they be sure, and In this activity this they’re is a Clearly, we’re year, fundamentals to I would connects there. on acreage our have But develop. surprised well they’re I got mean, go XXX to public there Neither chase of we’ve being that get we EOG plenty just not they’re little to as as And hopeful, inventory economic, area guy, active view to if we enough it know time. environment, the I to see frankly, up. it, going But we to price sophisticated an of Civitas EOG. we’re up that think, very highly that in

William Mault

so think activity, grow mean, seeing at I and prices, James, we’re Barnett as the Piceance, thing, gas may fairly And other if not these that just now, we activity look consistent you even had production. of add, kind the about the Summit. just And of XX% to particularly in Barnett the And sense PVP folks the very PVP Barnett. put decline We your in I’d smaller the more hold incremental XXXX, figures if of a that ranges, kind relative again, the kind view period, I in to of kind on volumetric you need for as that drill. a that the Utica, developed type level and XTO to that’s infill mentioned of the asset. Piceance, other add in then two thing decline come And back a was you or activity, hold the lease only old and with those a, system of year, give don’t lot kind of think as traditional but school stemming And Heath to of of wells, it in that think call a a on are flat. about down position similarly general that you up a much the acreage one where it’ll period, pad wells calendar kind and to

connected behind that net the of fairly acreage would to limited cash CapEx is incremental to already free inventory and majority a the and profile. So flow very Summit require

James Carreker

you. color. that Appreciate Thank all

Operator

please from America, go we And ahead. Gregg Brody, Instructions] have Bank of [Operator

Gregg Brody

there the previous thank at guys. good also details. asked for you Morning And A the questions of lot all analyst.

Just to there. up couple base follow on a wanted touch

as I’m capacity basin demand do how about get for Utica, you takeaway think if to can basin? they different appreciate gas? just gas that there So there out of attended ramping in I curious to if Or hands, and just developed. be is the

Heath Deneke

prices Yes, highly adjusted feel comfortable And drill. a to the net to that we we also out short basis, on elevated these the think there’s they’re wellhead, of answer, takeaway pretty the think I basin. of economic still

issue a footprint. being to that relates it would we think don’t I our So as see takeaway long-term capacity

Gregg Brody

there a the capacity Do you gas? just spare quantity of or sense of have

Heath Deneke

to a to the seen it short the basis made on that is, capacity basis being, for drive what quarter have some come down. is happens in of mean, can point don’t times, of shut unable it that’s to I past mean, been what, where I Utica below gas know maybe online. at seen, pricing has we where We give a that The we’ve out. is ever wells question had was two you seen quarter, built I is Usually on don’t in you, is, physically standpoint, we’ve a gas And to there than out. point at competition what gas that two a what But do and the think been we’ve move number higher out think incremental kind today. and answer get, the could a price. gas or takeaway been we’ve I I I the sense specific in still and production some at spot

So that a, really and of we with opinion starting down capacity. think be rigs we online. that of to gets they’re incremental year our we’re hopeful part it’s starting we up up the XCO to can’t plan, Utica headroom timing in whether returns some were to I have that pretty guy it’s is have And think for Utica of what fewer put position, just an I I enough And in their running the the would This disconnect. we somewhat like say what right Gulfport, be can basin. in takeaway it’s given actually just to drilled XXXX would wells in now. just speak drilled him, just, whether XXXX there, work we that enough could step be but feel is anomaly private kind sent hard and an the area come really or And rigs development getting they just than for that should

Gregg Brody

there. lot of there then talked the And you activity about a Permian, being

happen Adding are this Double is that of a line of this as Just how contractor, year? could there E for that take, contracted. have updates that’s relevant to any part that long that any you do potential the not something will sight

Heath Deneke

mean, this in that’s would fact the if only you look you new say Mexico I I placed and at they’re Yes. infrastructure is been New that really, the that service. look at

so E is and a a to that had they call at that’s look you secured. getting Mexico. on strategic sure of day You the why that it and that million position XX% gas out they partner our were that they problem for substantial pretty that why easily a was of took there seeing rigs, day Bcf XXX Double make being XXXX, in New start XCO can obviously thinking a out takeaway

that Some the at to wellhead lag bit more at until early could signal gas show -- have are, that little signal maybe we up they producers privates price see as need and transport. they XXXX. lot as be price think a times, the to and And a of suggests tend some

that I to we out, to here, XXXX, think able the by term couple activity revenues say, that will think grow Now production. some about we some done the get interruptible some if would subscribed to between surprised years. in But probably play here contracts, I continue see and fully have X.XX And optimization gas type can this and over kind I we continues thesis if be weren’t XXXX. see we’ll the rig next get of do short now we’ll conversations way now. it, ongoing maybe we

what that we the as now a to station X.XX, day. if inexpensive, up other New with add that’s trying to on we pipeline we’re is point mainline something given we most got And not that that a way phase Double be, to moving anticipate to to to And that’s volumes. compression compressor something require main able very is we’ve happen little to get going of ramp that Mexico, process trajectory see going just happen, one, the existing be in customers, with only to take yet That start will to going the to Now going today down. we just hard forward happen, be determined, service. could be us bottleneck doesn’t think that cost for two a that a timely to to up we that the is want bit basically see E how effective, but it’s is got but up the most that that Bcf and we’ve and we’re de talk

Gregg Brody

the much loan loans plans that of term some then are there, just preferred about that E it’s structure now, pretty another in at the term address to paying any drawn terms at JV? all? Just just any there Double to think thoughts, capital loans, in way that right term could And the change at or down

William Mault

mean, answer this let I me Yes, way, I Gregg, guess.

embedded term expansion agreement has the loan So, there, capabilities. credit down actually the

then contracts, So we incremental whether actually to depending distribution, grade, size, be we the could used preferred. get investment grade expand or do can service investment if that effectively facility which they’re not a take

We’re attractive back SMLP. capital, to X%. on the the there, And plus the limited obviously the very bank it’s But deal cash very in cognizant down also at fairly XXX.X. term priced, that flow cash at structure preferred results attractively pay it’s loans

the think pricing very, does year, as then chain, and course And this to attractive both the of million get, another look this is that cash be us kind those that E of paying going outline we’re paid and the that’s prep, at are and on XXX of see down flow ongoing you million term over I next to distributions generating recapping on end very year the and So, beyond. loan at would once kind of outstanding again, year XXX long-term free decent potentially And, an we assessment. just Double think size contract. I

place, accruing to to or So of SMLP that that’s about residual whether be and Summit, to flow net taking kind think we as all generate you growing going equity value, not. actual cash

Gregg Brody

question. touched on you And sense. makes That my next

are the helps you Is can preferred? little a sense how played preferred? about a there’s opportunity you’ve at think about exchange the is you a do just pay you talk that could bit that how thinking So you there take and Can equity and point some on that down possibility much dividend you that?

William Mault

the just a that would you barbell. If the XX think year I a XXX I’ll we million. expand for did the taker barbells, roughly XXX grade by bank investment off contract with give day million deal probably

Gregg Brody

probably you down would take to If all there. mean, some it could need of that. fund that I

So do you think? how much

Heath Deneke

contract. borrowing that that incremental would the capacity saying with I’m be incremental

TPD distribute up a So be that in able that majority service to breath. we’d the

Gregg Brody

that, a about ways the exchange to game that played to And thinking that’s is any still out? you’re today address equity tool follow other equity, the

Heath Deneke

like the we think in I side, A got E. Double Double we’ve structure place at the On capital

Gregg Brody

preferred the to referring Summit. I’m at

Heath Deneke

Look, we’ve exchanges four done or it. we’ve Gregg. Got on already, preferred, three the

to So, the But that the in are of issue think or that probably getting ability value, strategic strategic opportunities. just diminishing which I extent the about if comes to million there. want returns, our face other stay point a $XXX kind you something of left that investors at majority critical parity it about below that was opens of up preferred preferred to the suspect

Gregg Brody

some little you then opportunity think this you about, how about you, opportunity then press talked can talk And assets a much you you? bit for Got can it. for that you the about the acquisition maybe can M&A year. pruning be talked talk release, the maybe And in about you

Heath Deneke

question. first your catch didn’t I Sorry,

Gregg Brody

mentioned this be? you the release, in have sense year? print press you a might that much assets could Do some of You how

Heath Deneke

divest have What deals gotten or see would think we value. done, very few we’ve And mean, opportunity a done certainly think if attractive I bit acquire up I No. pick been couple on years a side, now. this it’s say sense. mindful. an we said we’re for of we positive and a have to makes opportunity seen M&A an where there’s an that I I at asset that mean, the actual

the And balance basis, on been just event in we’ll we sell the a on feelers a do I that it and or bet strengthen started And transaction has don’t de-levering transact accretive certainly the a do the board credit that’s of side stuff accelerate we’re out mindset lot opportunity to knows, the an management is, buy I whether team the at let to balance we’ve but on speculating. We’re continues it’s can going least got side. who you I’ve on since worth and there’s it. our to now. and to today. at it of on to going And think is if right I wanted focus mean, our look it. I the be mean, sheet it But sheet. the we

William Mault

that roughly this compressor, assets inventory. compressors as last we of late X kind that, inventory. were like so box sold year. in of just of about sitting of of year, weren’t of Think far other in so We sold kind that and using we X million kinds that Gregg, And million the

kind optimize latent nickels could inventory. there throughout dimes to inventory we the year course some of continue So and our of be and the as

Gregg Brody

for Great. That’s it Thanks your for me, help. guys.

Operator

today’s Thank you. Thank Ladies you gentlemen, and concludes joining. conference. this for

may disconnect. You now

Summit Midstream Partners (SMLP) 25 Feb 222021 Q4 Earnings call transcript