Summit Midstream Corporation Reports Third Quarter 2024 Financial and Operating Results
PR Newswire
HOUSTON, Nov. 12, 2024
HOUSTON, Nov. 12, 2024 /PRNewswire/ -- Summit Midstream Corporation $(SMC)$ ("Summit", "SMC" or the "Company") announced today its financial and operating results for the three months ended September 30, 2024.
Highlights
-- Third quarter 2024 net loss of $197.5 million, including $142.6 million
non-cash income tax expense to primarily establish SMC's deferred tax
liability associated with the C-Corp conversion
-- Generated adjusted EBITDA of $45.2 million, representing approximately 9%
quarter-over-quarter growth1, cash flow available for distributions
("Distributable Cash Flow" or "DCF") of $22.1 million and free cash flow
("FCF") of $9.9 million
-- Expect to generate approximately $45 million to $50 million of adjusted
EBITDA in the fourth quarter 2024
-- Connected 38 wells during the third quarter and maintained an active
customer base with six active drilling rigs and more than 100 drilled but
uncompleted wells ("DUCs") behind our systems
-- Closed the C-Corp conversion and a series of re-financing transactions,
further simplifying our corporate structure, extending debt maturities
and lowering our cost of capital
-- Announced the transformative acquisition of Tall Oak Midstream III in
the Arkoma Basin and filed the definitive proxy with the special meeting
of stockholders expected to occur on November 29, 2024
(1) Normalized for $1.6 million of Northeast segment adjusted EBITDA
generated in the second quarter 2024
Management Commentary
Heath Deneke, President, Chief Executive Officer and Chairman, commented, "Summit's third quarter operating and financial results were in line with management expectations, reflecting a very active quarter both corporately and operationally. From a corporate perspective, we closed out the C-Corp conversion, successfully refinanced our balance sheet and announced the transformative acquisition of Tall Oak Midstream III. We believe these transactions continue to position Summit for further growth and significant value-creation for our shareholders.
From an operational perspective, we connected 38 wells to the system, have six rigs currently operating behind our footprint and made final investment decision on a $10 million optimization project in the Rockies segment that is anticipated to have an approximate one-year payback period and improve our Adjusted EBITDA margin beginning in the second quarter 2025. Nine of the 38 wells were connected behind our Barnett system which brings total year-to-date well connections in the Barnett to 27 wells, with a rig continuing to drill wells expected in 2025. The other 29 wells connected during the quarter came from the DJ Basin, bringing total year-to-date wells to 86, exceeding our expectations with activity levels and volumes behind the system remaining robust.
Additionally, as a brief update to our recently announced Tall Oak acquisition, we continue to expect to close the transaction during the fourth quarter of 2024. Since announcement, the Tall Oak management team executed a new contract for approximately 20 MMcf/d of existing in-basin production that is expected to begin deliveries to Tall Oak in the second half of 2025 and continue to see the active rig drilling wells that are expected to come online as soon as the end of this year. We filed the definitive proxy on October 31, 2024 with the special meeting of stockholders currently scheduled on November 29, 2024. Each shareholder's vote is important to us so we encourage all shareholders to vote."
Third Quarter 2024 Business Highlights
SMC's average daily natural gas throughput for its wholly owned operated systems decreased 6.8% to 667 MMcf/d, and liquids volumes decreased 6.7% to 70 Mbbl/d, relative to the second quarter of 2024. Double E Pipeline gross volumes transported increased from 549 MMcf/d to 661 MMcf/d, a 20.4% increase quarter-over-quarter and generated $8.5 million of adjusted EBITDA, net to SMC, for the third quarter of 2024.
Natural gas price-driven segments:
-- Natural gas price-driven segments had combined quarterly segment adjusted
EBITDA of $20.1 million, representing a 1.1% increase relative to the
second quarter and combined capital expenditures of $1.7 million in the
third quarter of 2024.
-- Piceance segment adjusted EBITDA totaled $12.8 million, consistent from
the second quarter of 2024. Volume throughput decreased 1.7% from the
second quarter primarily due to natural production declines and no new
wells connected to the system during the quarter.
-- Barnett segment adjusted EBITDA totaled $7.3 million, an increase of $1.9
million relative to the second quarter of 2024, primarily due to a 26.2%
increase in volumes from a customer continuing to increase flow of
curtailed volumes and 9 new wells connected to the system from our anchor
customer during the quarter. We estimate there is still approximately
20 MMcf/d of shut-in production behind the system. There is currently one
rig running and 14 DUCs behind the system.
Oil price-driven segments:
-- Oil price-driven segments generated $33.3 million of combined segment
adjusted EBITDA, representing a 9.1% increase relative to the second
quarter, and had combined capital expenditures of $8.7 million.
-- Permian segment adjusted EBITDA totaled $8.5 million, an increase of $0.8
million from the second quarter of 2024, primarily due to 20% increase in
volumes shipped on the Double E Pipeline leading to an increase in
proportionate adjusted EBITDA from our Double E joint venture.
-- Rockies segment adjusted EBITDA totaled $24.9 million, an increase of
8.7% relative to the second quarter of 2024, primarily due to increased
product margin in the DJ Basin, partially offset by a 6.7% decrease in
liquids volume throughput. Operational downtime continued to impact
volume throughput in the DJ Basin, however, repairs were completed during
the quarter, and all systems have now returned to normal operational
capacity. There were 29 new wells connected during the quarter, all in
the DJ Basin. There are currently five rigs running and approximately 90
DUCs behind the systems.
The following table presents average daily throughput by reportable segment for the periods indicated:
Three Months Ended Nine Months Ended
September 30, September 30,
-------------------- -------------------
2024 2023 2024 2023
-------- ---------- -------- ---------
Average daily throughput
(MMcf/d):
Northeast (1) -- 752 269 658
Rockies 128 117 127 108
Piceance 284 313 295 299
Barnett 255 170 212 184
-------- ---------- -------- ---------
Aggregate average daily
throughput 667 1,352 903 1,249
======== ========== ======== =========
Average daily throughput
(Mbbl/d):
Rockies 70 85 73 76
-------- ---------- -------- ---------
Aggregate average daily
throughput 70 85 73 76
======== ========== ======== =========
Ohio Gathering average daily
throughput (MMcf/d) (2) -- 870 283 763
======== ========== ======== =========
Double E average daily
throughput (MMcf/d) (3) 661 327 559 278
======== ========== ======== =========
_________
(1) Exclusive of Ohio Gathering due to equity method accounting.
(2) Gross basis, represents 100% of volume throughput for Ohio Gathering,
subject to a one-month lag.
(3) Gross basis, represents 100% of volume throughput for Double E.
The following table presents adjusted EBITDA by reportable segment for the periods indicated:
Three Months Ended Nine Months Ended
September 30, September 30,
----------------------------------- --------------------------------
2024 2023 2024 2023
------------------ --------------- --------------- ---------------
(In thousands) (In thousands)
Reportable
segment adjusted
EBITDA (1) :
Northeast (2) $ -- $ 27,751 $ 30,634 $ 65,806
Rockies 24,850 24,998 70,582 64,986
Permian (3) 8,472 5,840 23,434 16,283
Piceance 12,831 15,292 40,912 43,640
Barnett 7,278 6,084 17,798 20,380
------------------ --------------- --------------- ---------------
Total $ 53,431 $ 79,965 $ 183,360 $ 211,095
Less: Corporate
and Other (4) 8,193 7,175 24,915 19,267
------------------ --------------- --------------- ---------------
Adjusted EBITDA
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