Earnings call transcript Q2 2023

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Operator

Good day, and thank you for standing by, and welcome to the Q2 2023 Summit Midstream Partners LP Earnings Conference Call. After the speakers presentation there will be a question and answer session. [Operator Instructions] Please be advised that today's conference is being recorded.

I would now like to introduce your host for today's call, Randall Burton. Please go ahead.

Randall Burton

morning, good and operator, everyone. Thanks,

and already If release, it copy Quarterly Events earnings a visit you on section. our homepage, find don't please you'll website of where or have at section Presentations the Results www.summitmidstream.com,

members second team. our With of and along Chief Deneke, President, Financial XXXX Heath and Officer other quarter Chief me Officer; is discuss Executive results of Chairman; financial management to our today our our senior operating Bill with Mault,

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

believe be we can we will no Although such in these reflected correct. are prove that forward-looking such reasonable, statements assurance expectations to that provide expectations

XXXX report other was see SEC Please our to factors XX-K, a March the filings as expected SEC that which with for filed from actual listing results. annual XXXX, well differ results cause on of our X, as could on materially Form

measures that cash our are and terms use call, this adjusted EBITDA, in most provided reconciliations flow. EBITDA, have we recent release. directly distributable Please we GAAP non-GAAP most note flow also comparable cash on free measures earnings and the These financial the to

to call the with over Heath. that, turn I'll And

Heath Deneke

completions price new regions Northeast below our the EBITDA Rocky temporary expectations and system, to Randall, wells $XX.X you, primarily Thank good was of with and lower-than-expected delays Summit associated Barnett and quarter morning, and management behind deferrals commodity well timing shut-ins of second impacts. in everyone. million, which reported adjusted due

few much XX still Summit into quarter second of during the comments of on Bill want detail of quarter later our wells these but start the quarter. on points in Despite for the total will results year. to we had a I before operating half commentary, share key a get segments. the further segment did connected across active to his few a kind on a We very ahead headlines, looking

the second XXXX. for any line be for and that summer shut-ins primarily shut happened $XX the versus relative So new economic-driven about of which higher subsequently and matter. XXXX gas X reduction segments during appears of flowing producers customers offset in Barnett wells by the million any other believe shut-ins during late the these in are Barnett, our X that was of weeks in the quarter, a or driven XX than in prices PDP This an roughly to to turned to experienced we starting haven't projected day operating our a wells from wells. We production of low more prices other anomaly that for trend strip that by Barnett the later,

is later gas that the would and come into year. this timing in from wells next as year shutting these While online back we will production price uncertain, Barnett strengthen expect

growth new adjusted This XX which the wells We segment during resulted to on Moving connected in of really the a quarter-over-quarter EBITDA pickup. Northeast. quarter, nice is XX%.

were delayed into which wells, have were behind third May be big wholly-owned of XX in However, slated line were system, SMU we in roughly did our wells turned which the none quarter. to

that time. well in during second to we planned first XXX quarterly in connected the wells the slipped originally on XXX expectations completions failed roughly half into year, -- due had under we segments, Rocky XX aggregate, just that the XXXX. roughly so We that connect of of to primarily the which half to we the compares In wells

do additional on XX however, furthermore, Utica. and bad behind that's XX the based recent including our is The the in still news, quarter the just connected second the year, in Bakken to few over driver is a of timing customer original new which, good primary So the And wells plans, the end with wells miss. an to generally past terms in the we the the connect the certainly expectations, is it XX line been throughout XXX the expect again, we've total news. it weeks, of has And system delayed by in of year. already

as XXX the system wells of connected to thus today, we've So far.

have from inventory, and a over drive and quarter our in the is have active system. uncompleted will We look quarterly our sequential level behind XXXX. of is drilled and which confidence base, but to activity we customer XX ahead running growth, that fueling rigs we XXX in to This meaningful as third we strong wells into continue our encouraging continue beginning

So It low our And remaining further on the producer $XX latest These our lines quarterly commodity reflect from first includes range along generally the the timing on we looking on high risking new wells our for press half of release respectively. ranges night, the our risk adjustments side slippage $XX view updated that experienced POP expect of a year million during expected wells in on now quarter to ahead, our of last million reflects price adjusted announced of turn-in-line we and in the the fourth also remainder to side. a contracts. and of and are $XX third million million, EBITDA continued to dates year. as the $XX what

million. XXXX the of and revising XXXX we're the XXXX to to half So updated $XXX actual of our results adjusted half EBITDA guidance second based on quarterly outlook, $XXX first million

to associated QX results believe is just While that overall experiencing impacts, do are up we're we million XXXX $XXX X a adjusted that incur calendar quarter delay in in the or certainly LTM to ramping the and we what largely year we XXXX. expected the of disappointed in EBITDA

the to EBITDA the during turn half, first million and combine you outlook, risk towards scheduled fourth first XXXX. in of care third now are the with half cadence adjusted online of and expect the If customer along quarter $XXX that latest updated of our we activity wells to trend

with and the expectations. results call over on So the me let that, segment provide Bill to some color turn to additional

William Mault

which everyone. In to Thanks, day the increase OGC and volumes. the of system, million growth our Heath, feet venture is proportionate primarily quarter, inclusive to the Marcellus averaged joint a $XX.X good representing adjusted SMU of XXX share XX% an and feet $X.X million cubic cubic increase Segment day EBITDA which million, is system, million, of X,XXX our quarter, inclusive our relative in volumes. first the Ohio due Northeast, an of Gathering during morning, a AH totaled segment of

system, were our X behind during online wells wells new XX wholly-owned OGC venture behind and wells joint brought Two behind new Mountaineer new system our SMU quarter. our the

quarter of were we back a shut-ins impacted XX related majority adjusted frac online, the SMU. cubic $X.X in shut-ins estimate EBITDA While the million OGC million. at were feet at still related day by Which experienced brought approximately protect a of protect we there frac first

system X $XX initial given to The the rates subsequent in quarter frac new timing shut-ins at quarter third end, second to protect With million curves, beating from brought we with production SMU type are we shut-in of that quarter. the that the wells with volume. behind related the the previously along our on were delay SMU than said, longer completion expected offline being

wells also X our had Ohio new connected Gathering behind We subsequently joint venture.

continue our and million million growth segment the the of commodity-based and due running decrease which customer lower we generated The are adjusted expect segment, with of EBITDA the volumes inclusive about remain $X.X results we first the rigs commodity mix is of lower drive excited lower commodity year. levels. X from XX fee-oriented There second EBITDA prices. and DJ lower decreased adjusted lower of to which well decreased currently Rocky $X.X to the systems activity and due systems revenue to margin million, $XX.X to volume prices. delayed, Although approximately primarily combination Williston a quarter significant due Basin and of half $X.X to a Fixed in behind million and margin ducts. realized and primarily volumes volumes very

to day first the X% volume cubic XX the In natural per quarter. averaged gas feet an DJ, decline throughput representing relative million

there given in connected we natural type quarter, to wells achieve contribute XX curves fourth new wells materially expect in would area, year. quarter. this of quarter the in DJ these second the in wells the peak production While to volumes these gas And reminder, a XX were the didn't as this

prices, $X.XX first per our from the in per the barrel. to the second barrel MMBtu per down Realized NGL declined To composite gallon context prices down commodity on quarter prices realized sales per from which impacts in approximately approximately and WTI $X.XX MMBtu the $XX $XX declined region per declined provide prices, in $X.XX per to in a approximately approximately quarter. quarter approximately natural condensate to gas little from the first gallon second. $X in

during quarter the strip the expectations with much While prices line and year expect index pricing, prices be ended trough we represent back was believe dropped on below expectations, guidance to we and prices second assumptions quarter our up gas quarter. projected our commodity and declines for will XX% that in our marketplace, lower than original in by in current in original Based anticipated commodity NGL in quarter. XX% what commodity the original second the to the general prices fourth

X declines throughput second of coming a a quarter XX,XXX the first during to In barrels the quarter. decrease averaged wells the per volume PDP during Williston, X% liquids as relative day quarter result the online only new and

systems. while number the the connections second well to of below timing of in robust. are in rigs the the second quarter and at from frustrated and was remain mentioned, well X year. the half wells with Again, completion XXX a expectations was connected As running, and behind to shift than Heath due including delays, activity primarily in Williston DJ July our the we the in quarter the more Williston ducts with levels XX X the completion in X

quarter, to DUCs in of relative Pipeline volume adjusted first the segment, interest averaging to feet per due of our to with XX during we in increase XXXX. volumes from million, X.X% million of and The day quarter. EBITDA the to reported increase system the first which relative is line $X.X an Permian expect in to quarter. continue wells X total quarter, running, increase XXX primarily connected Double new an Piceance to rig $X.X EBITDA reported an wells adjusted of turned was the XX segment of XX be currently cubic which the million E Basin that There includes relative first to the million, million $X.X $XX.X XX%

million segment of decline quarter, revenue by income primarily $X.X first offset increase million $X.X in Barnett an X.X% million, to the an volume. to other reported $X.X of and The EBITDA of adjusted relative due

estimate frac a prices and gas million day per to million for cubic approximately shut During per XX million approximately feet We a expected shut-ins the XX quarter. to and feet approximately shut-ins of cubic X the natural we activities. million day that quarter, of protect million cubic EBITDA low X the protect due feet day customer continue impacted cubic adjusted in a $X.X feet unexpected production of day shut-in frac have during by

our from X of on decided of customers wells being to X XX. increase an site Additionally, the drilled pad to existing number

While today. over and XX end DUCs drilling behind this this to XX currently brought is certainly There into a rig XXXX. positive year. expect timing be and by completion XX the wells X running the the have online We and currently of system development, the is expect DUCs extended to

the of partnership. net and of loss adjusted second million quarter EBITDA $XX.X on million. reported Quickly a SMLP $XX.X

main be EBITDA mentioned, boiled can was As adjusted of million factors. below $XX.X the X really expectations our down to Heath and

we estimate into a posted from that the saw approximately adjusted in in First, activity Northeast EBITDA third million shift we the quarter of $X the quarter. segments and Rockies second completion

which million economic should approximately realized upward Barnett. the of in was fourth and $X the in $X.X and start there quarters DJ, commodity of prices unexpected lower-than-expected approximately the Secondly, trending million third shut-ins in

is our While to to of the in quarter. our expectations to million $XX expectation adjusted quarter, internal the impacted generate this second third in EBITDA relative $XX in million results confidence providing

the the Basin projects. Rockies million $XX.X spent maintenance totaled DJ quarter the integration for with pad majority the quarter, the CapEx The CapEx. $X.X included and and costs and -- associated was Capital of connect with expenditures during of expectations million in in line

quarter respect $X.XX we and billion, total second With million. sheet, approximately to the of balance had net $XX liquidity SMLP's at debt the approximately of totaled end

at to Before XX.X% adjusted to guidance million EBITDA call $XX our reduction turning XXXX of like the segment level. midpoint the back or at I'd the down revised break the Heath,

the first at XXXX increase, for in the in expect to Barnett, Starting over originally is and gas connections we XX end during the be well be estimated XX with XX. that by anchor least customer by good news to year the only and are half. in there'll inventory turned now of XX our XX wells expected prices DUC line The to scheduled

day shut-ins other the half year. that the other $XX to X XX Of unexpected cubic roughly in due impact for we of a shutdowns. million the feet segment this expect at X The half the revision was major was this was and to timing due months midpoint, to unexpected delays million

In the connections to line well with remain are guidance. Rockies, generally original our total expected in

shifted second we in commodity we expect the our in back expectations, to X expectations to the catch below quarter. and are well original DJ, prices completions fourth have original However, third what quarters. X up in to where quarter the quarter our expect prices In the

expected but total the Rocky shifted and remain thus a million impact impacts segment, timing partially approximately in due higher-than-expected connections initial to commodity $X $X are original by approximately shift. by our million Northeast, by also that to completions We In expectations $XX shift, million shifts the quarter our line the in is Of to the was $XX quarter. due production well in is rates guidance, have which approximately that, offset with third estimate far million. price

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

Heath Deneke

you, Thank Bill.

wrap in admittedly QX us into for of calendar related disappointing. call open past. frustrated questions, in adjusted extent the they in again, from to communicated We're as largely is the wanted the acknowledge and of guidance that reduction I completion with second as EBITDA shifted And timely have shifts up the delays the been up half before that our year the were So to we well not dates and QX to these year. the results

well online QX appropriately potential quarter relative updated our POP this QX fourth risk within wells, could our believe have on While to those We commodity contracts. come outlook slippage in around that the which reached plans year, additional see our we and customer price as on our we as explained third and do remaining our are delays impacts to

that forward, look there's a we some to those of already. the online lot wells vast as picture, exceeding, delayed see the we to The be in Utica, either Northeast were at have turned well within wells majority in big So about performance excited cases I And and segments particularly QX or think in continue performing Summit, our Rockies been the certainly expectations.

running the a complete wells the XX are again, be large X behind year. thought, inventory or certainly drilling originally believe of we're next We behind from And very very we EBITDA rigs continue well by million what to that $XXX we encouraged still of quarter while and on are adjusted we of half we during currently our systems. positioned to acknowledge achieve first LTM

open with further you the look let's for I'd forward call throughout time as we your that, operator, progress to continued thank year. we So providing questions. like support. And to up and for the updates

Operator

question first Brody of [Operator America. Instructions] Our comes from Bank from Gregg

Gregg Brody

XQ on details the XQ. all for you and Thank

visibility you country, seen of that Just the issues see the has that, operations should with to issues or the across it's we quarter so have any this here. something commodities drilling any mentioned to thinking add easier weather be about? obviously, hot to caused improved, with you Have

Heath Deneke

Heath. really the truthfully, our QX is connect outside drilling of producer both a of pricing Barnett, well in had thought may No, changed of some the And the it hasn't but standpoint slippage didn't we connects or honestly, from really This drill lower we the would even completion around a have come some scheduled online -- really that the levels, some standpoint. activity hadn't.

the completed had drilled a been I mean, still and month think don't I before were I and could So we don't have cases where it's there they saw really actually almost wells be -- catch have driven, that a might our most and suspect pretty I But IP commodity this month And of levels next bit little versus for online. resilient. remained the month. returned part, activity weather.

Gregg Brody

us can Double based where think to shift -- -- see thinking the the I how today, plan about Maybe you there. think restricted that to to today? question, what how point? from you the just that? is -- just do I'm then about you you're trying within this give into look at on And that to how on think E, timing that about I group. And fold think idea ramp an to longer-term

Heath Deneke

Yes. predict, -- out to hard the a we footprint. a Timing of lot fundamentals know there. just is little to have they're there's are continuing -- the but right We plants that and that strengthen announced new E getting constructed been Double alongside

pipeline. is ramp we're -- already, confident right? we've about that I we feel that got So the stepped the believe up now, fill a up contracted . the a very still to Bcf day has Right Bill, going

William Mault

Greg. Yes,

see Lee of we sits towards right we around it, think and pipe. X.X, a north Eddie production to where kind X.X kind you're wellhead, start So volumes important that of where migrate as that's should pretty a that today, kind milestone of of County Bcf, the

And as noticed pipe, XXX Heath That's interest have the mentioned, there. former plant that in already them, a the you obviously. expanding may million connected -- we putting sold Matador saw to announced we Lane in to

So these reductions rigs to XXX but look, Mexico and some are indicators pretty all the rig -- Midland we've running. side, good at seen on the XXX side fundamental resilient stayed New

Heath Deneke

Yes.

of way tough long certainly it's a a you in So to talks. like specific give saying, of kind

with in have talks We producers. been

incremental new seeing as the plants come capacity are need for We these online.

I should we see ramp-up Loving of area, think you County announced. or contracts Mexico next over in The trajectory, looking that. some the there's or So we of and of if kind volumes would at volumes and you level get some is just the tell . that that follow the certainly of timing X, we'll when those when and New no Reeves start. contracts secure gas the question in about doubt that year contract timing of new will increase kind the EBITDA

Gregg Brody

Do relative the company think it some there. the seen them. you been then other and anywhere operating that's the companies where -- your cut And M&A that was up footprint seems -- M&A there's count on been they the has buy notable? to like rig you Have assets

Heath Deneke

see -- much honestly, really, in more Not that we the Midland. you

some certainly consolidation. seen footprint, have Exon think But I around our we customer. being and in obviously, anchor our producers, the

a we've seeing mix and of new private the just We're and like they're New up talking time. burns blowing going and guys some to of really lot still got that the kind of same footprint. down the the been You've quite world, Mexico customer for

what's look we're still kind is having this a of service between time, And kind of bit downstream out I out the interesting as Waha. think projects of over all you in about little in takeaway

there's attractive little as to a So on. today gap bit a getting once here come Waha of timing those pipelines isn't probably that

So that there's of us a little influencing that, of timing is bit incremental think new the contracts. we securing

Gregg Brody

this say you question long-haul leads that's Or And just downstream you're to it Is my one. When next it the the that correct. to pipeline. as Is referring -- correct? is correct.

how refi what's sort Just thinking your the thoughts? today capital of are the about you of and current structure

William Mault

Yes. Greg, it's Bill.

So in due kind of got comes look, unsecured 'XX. April million that $XXX we've of

of $XXX an unsecured to piece little do lien maybe option next year. of million of doing of Look, execute. kind that full just a a we'd where kind getting we're recapitalization looking of mini second and window the here, like certainly stub to just we're the X range unsecured and extend So close XX-month on alternatives potentially to that kind at deal, of being out paper of a

with sight about we've kind some think think here LTM in want good momentum got million year, be results perspective, and February -- out time, and then on we'll cadence start time. market -- a to got out out our that the think then we out with additional from is $XXX next half. you come would when execute pretty to And that information, with information to growth it of I think proving this Greg, just that about then great We of we'll for our real go we'll the that guidance that put of get refinancing. Greg, But once EBITDA. coming of line coming second a a all be the we've to XX-K at good as market I as in to year And cadence come to I calendar formal us

Gregg Brody

And been that to about of as is -- Can you potentially there deleverage. then opportunity historically on? And that think has just the that out something M&A you're strategy part today. set I working talk

Heath Deneke

of honestly, with look, Yes. growth we're us ahead on of existing our footprint. I focused just mean the kind

around and focus. I Bakken We in consolidation think have see DJ our particularly theme that's and been area. primary -- to a certainly the of continue opportunities the footprint, in the

the evaluating So opportunities, focus now. we're not certainly right it's those primary but

we're be get that to a have momentum much again, here the operating footprint. kind is makes operationally. deal, right think with I our that so really It in lot the something can with of just meaningfully we deal -- we and of has sense right good synergies tucked

Gregg Brody

Is -- a there -- is fair there? out a there's -- guess, I appreciate the on there it's are growth still focus Or are I opportunities is there of just amount

Heath Deneke

Yes, we think with And opportunity that sets. portfolio emphasizing the I good that definitely pretty is now. we're we're have what comfortable

whether And post there makes we'll really sense lot assets that so. it refinancing will And or the some will get that time probably opportunistic if those and year the transact tell. of at But refinancing next conjunction be with just that's of not we are value. right or out or so there believe over we a something in

William Mault

little are to smaller in just probably color to assets particular, And our sponsor-owned Yes. business. X the strategic kind DJ Greg, to provide of there's that in a type

range kind of strategic is. how Now

that this that was to today. some huge are into around again, up to eye point, of with things what we'll knew we've be going really in to those Williston, Some year in portfolio execution to year it got a us, we'll highly keep And continue interesting the be strategic, And kind the of patient strategic, coming a we opportunities. are then there's that on. modestly are an but Heath's couple

and hitting make our to want that we So hitting growth. we're kind numbers sure that of . hitting

Gregg Brody

here. that. the I And X appreciate last maybe

there. have the there, there's you a that is working if that And that? the So -- opportunity small be Or you're that? on out you'll Is to it? preferred that just just is address of still something piece something

William Mault

perpetual. I not capital of We it's mean there. of continue kind It's the can to Greg, Yes, structure. accrued a distributions chunk huge

think piece common that is more you'll think And kind ready to got distribution. wood leverage of actively we've see when of kind some where I turn a top on to us to we're about target. get on paper maybe of alternatives to our

it's really, focal So total for to at we that growth time it leverage. our driving a but are is on accrue down huge us the focus -- not and of point continues being, cognizant really driving this EBITDA kind

Operator

showing I And further no This Thank for call. concludes participating. conference am you questions. today's

now may You disconnect.

Summit Midstream Partners (SMLP) 10 Aug 232023 Q2 Earnings call transcript