Item 2. Management’s Discussion and Analysis
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
This Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) is intended to inform the reader about matters affecting the financial condition and results of operations of the Company and its subsidiaries for the periods since December 31, 2023. As a result, the following discussion should be read in conjunction with the Company’s unaudited condensed consolidated financial statements and notes thereto included in this report and the MD&A and the audited consolidated financial statements and related notes that are included in the Partnership’s 2023 Annual Report. Among other things, those financial statements and the related notes include more detailed information regarding the basis of presentation for the following information. This discussion contains forward-looking statements that constitute our plans, estimates and beliefs. These forward-looking statements involve numerous risks and uncertainties, including, but not limited to, those discussed in the section “Forward-Looking Statements.” Actual results may differ materially from those contained in any forward-looking statements.
Unless the context requires otherwise or unless otherwise noted, all references to “Summit Midstream,” the “Company,” “we,” “us,” “our” or like terms are to Summit Midstream Corporation (including its subsidiaries) for the periods after August 1, 2024, the date the Corporate Reorganization was consummated. For the periods prior to August 1, 2024, unless the context requires otherwise or unless otherwise noted, all reference to “Summit Midstream,” or the “Company” are to Summit Midstream Partners, LP. (including its subsidiaries).
Overview
We are a value-oriented company focused on developing, owning and operating midstream energy infrastructure assets that are strategically located in unconventional resource basins, primarily shale formations, in the continental United States.
Our financial results are driven primarily by volume throughput across our gathering systems and by expense management. We generate the majority of our revenues from the gathering, compression, treating and processing services that we provide to our customers. A majority of the volumes that we gather, compress, treat and/or process have a fixed-fee rate structure which enhances the stability of our cash flows by providing a revenue stream that is not subject to direct commodity price risk. We also earn a portion of our revenues from the following activities that directly expose us to fluctuations in commodity prices: (i) the sale of physical natural gas and/or NGLs purchased under percentage-of-proceeds or other processing arrangements with certain of our customers in the Rockies and Piceance segments, (ii) the sale of natural gas we retain from certain Barnett segment customers, (iii) the sale of condensate we retain from our gathering services in the Rockies and Piceance segment and (iv) additional gathering fees that are tied to the performance of certain commodity price indexes which are then added to the fixed gathering rates.
We also have indirect exposure to changes in commodity prices such that persistently low commodity prices may cause our customers to delay and/or cancel drilling and/or completion activities or temporarily shut-in production, which would reduce the volumes of natural gas and crude oil (and associated volumes of produced water) that we gather. If certain of our customers cancel or delay drilling and/or completion activities or temporarily shut-in production, the associated MVCs, if any, ensure that we will earn a minimum amount of revenue.
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The following table presents certain consolidated and reportable segment financial data. For additional information on our reportable segments, see the “Segment Overview for the Three and Nine Months Ended September 30, 2024 and 2023” section included herein.
Three Months Ended September 30, Nine Months Ended September 30,
2024 2023 2024 2023
(In thousands)
Net income (loss) $ (197,541) $ 3,874 $ (88,392) $ (23,829)
Reportable segment adjusted EBITDA
Rockies
$ 24,850 $ 24,998 $ 70,582 $ 64,986
Permian
8,472 5,840 23,434 16,283
Northeast
— 27,751 30,634 65,806
Piceance
12,831 15,292 40,912 43,640
Barnett
7,278 6,084 17,798 20,380
Net cash provided by operating activities $ 9,151 $ 59,119 $ 40,124 $ 110,759
Capital expenditures (1)
10,941 17,685 37,861 49,863
Proceeds from Summit Utica Sale (excluding Ohio Gathering) — — 292,266 —
Proceeds from sale of Ohio Gathering — — 332,734 —
Proceeds from Mountaineer Transaction (696) — 69,304 —
Investment in Double E equity method investee 989 — 1,431 3,500
Debt repayments - ABL Facility — (33,000) (313,000) (70,000)
Debt repayments - Redemption of 2026 Unsecured Notes — — (209,510) —
Debt repayments - 2026 Secured Notes (Excess Cash Flow Offer) — — (13,626) —
Debt repayments - 2026 Secured Notes (Asset Sale Offer) — — (6,910) —
Debt repayments - Permian Transmission Term Loan (3,934) (2,684) (11,555) (7,804)
Debt repayments - 2025 Senior Notes Redemption (49,783) — (49,783) —
Debt repayments - 2026 Secured Notes Redemption (649,805) — (649,805) —
Borrowings on Amended and Restated ABL Facility 150,000 — 150,000 35,000
Issuance of 2029 Secured Notes 565,800 — 565,800 —
Debt extinguishment costs (19,260) — (21,355) —
(1) See “Liquidity and Capital Resources” herein to the unaudited condensed consolidated financial statements for additional information on capital expenditures.
Trends and Outlook
Our business has been, and we expect our future business to continue to be, affected by the following key trends:
• Ongoing impact of political and economic conditions and events in foreign oil and natural gas producing countries on commodity prices, including the continued conflict in the Middle East, current Russia-Ukraine conflict, the international sanctions against Russia and other sustained military campaigns;
• Natural gas, NGL and crude oil supply and demand dynamics;
• Actions of the OPEC and its allies, including the ability and willingness of the members of OPEC and other exporting nations to agree to and maintain oil price and production controls;
• Production from U.S. shale plays;
• Capital markets availability and cost of capital; and
• Inflation and shifts in operating costs.
Our expectations are based on assumptions made by us and information currently available to us. To the extent our underlying assumptions about, or interpretations of, available information prove to be incorrect, our actual results may vary materially from our expected results. For additional information, see the “Trends and Outlook” section of MD&A included in the 2023 Annual Report.
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Tall Oak Business Combination Agreement. On October 1, 2024, we entered into a Business Contribution Agreement (the “Business Contribution Agreement”), by and among the Company, the Partnership, and Tall Oak Midstream Holdings, LLC, a Delaware limited liability company (“Tall Oak Parent”), pursuant to which, among other things, upon the satisfaction of the terms and conditions set forth therein, Tall Oak Parent will contribute all of its equity interests (the “Tall Oak Interests”) in Tall Oak Midstream Operating, LLC, a Delaware limited liability company (“Tall Oak”), to the Partnership, in exchange for an aggregate amount equal to (i) $425.0 million, consisting of (a) $155.0 million in cash consideration, subject to certain adjustments contemplated by the Business Contribution Agreement, and (b) 7,471,008 shares of Class B common stock of the Company, par value $0.01 per share (the “Class B Common Stock”) and 7,471,008 common units representing limited partner interests of the Partnership (together with the Class B Common Stock, the “Securities”), plus (ii) potential cumulative earnout payments continuing through March 31, 2026 not to exceed $25.0 million in the aggregate that Tall Oak Parent may become entitled to receive pursuant to the Business Contribution Agreement subject to Tall Oak and its customers meeting certain development requirements.
The consummation of the transaction contemplated by the Business Contribution Agreement (the “Transaction”) is subject to various closing conditions, including, among other things, the approval by the holders of a majority of all votes cast at a special meeting of the stockholders of the Company relating to the issuance of the Securities. At the closing of the Transaction, the Board of Directors will be increased from the current seven directors to eleven directors, and Tailwater Capital LLC will elect four new directors to the Board of Directors.
Corporate Reorganization . On August 1, 2024, following unitholder approval at the Partnership’s Special Meeting of Unitholders on July 18, 2024, the Partnership consummated a previously announced transaction that resulted in the Partnership becoming a wholly owned subsidiary of a newly formed Delaware corporation, Summit Midstream Corporation. Upon the consummation of the Corporate Reorganization, each outstanding common unit of the Partnership was converted into the right to receive 1.000 shares of common stock of Summit Midstream Corporation and each outstanding Series A Preferred Unit was converted into the right to receive 1.000 shares of Series A Preferred Stock of Summit Midstream Corporation, with the liquidation preference of each share of Series A Preferred Stock initially equal to $1,000 and the Series A Certificate of Designation deeming all accumulated and unpaid distributions on the Series A Preferred Units to be Series A Unpaid Cash Dividends (as defined in the Series A Certificate of Designation) per share of Series A Preferred Stock, which constituted all consideration to be paid in respect to such Series A Preferred Units, and any rights to accumulated and unpaid distributions on such Series A Preferred Units were discharged.
The Corporate Reorganization was accounted for as a common-control transaction between the Partnership and Summit Midstream Corporation as a result of the Partnership’s unitholders controlling both the Partnership and Summit Midstream Corporation before and after the Merger. In the case of this common-control transaction, the historical financial statements of the Partnership became the historical financial statements of Summit Midstream Corporation, except for certain changes that conform the Partnership’s historical financial statements to a corporate entity. These changes include, but are not limited to, the reclassification of the Partnership’s capital accounts to shareholders’ equity accounts and an update of certain limited partner terms to synonymous corporate entity terms. The Corporate Reorganization had no impact to historical revenues, expenses, assets, liabilities, or cash flows.
Mountaineer Transaction. On May 1, 2024, we completed the Mountaineer Transaction for a cash sale price of $70.0 million, subject to customary post-closing adjustments. Mountaineer Midstream was the owner of midstream assets located in the Marcellus Shale. Prior to closing the Mountaineer Transaction, we sold related compression assets located in the Marcellus Shale to a compression service provider for approximately $5 million in April 2024.
Summit Utica Sale. As previously announced on March 22, 2024, we completed the Utica Sale for a cash sale price of $625.0 million, subject to customary post-closing adjustments. Summit Utica was the owner of (i) approximately 36% of the issued and outstanding equity interests in OGC, (ii) approximately 38% of the issued and outstanding equity interests in OCC, together with OGC, Ohio Gathering and (iii) midstream assets located in the Utica Shale. Ohio Gathering was the owner of a natural gas gathering system and condensate stabilization facility located in Belmont and Monroe counties in the Utica Shale in southeastern Ohio.
Refinancing Transactions. The Partnership issued the 2029 Secured Notes and completed the 2026 Secured Notes Tender Offer and subsequent redemption, and the redemption of the 2025 Senior Notes.
2029 Secured Notes. On July 26, 2024, Summit Holdings issued $575.0 million aggregate principal amount of 8.625% Senior Secured Second Lien Notes due 2029. The 2029 Secured Notes mature on October 31, 2029 and have interest payable semi-annually in arrears on each February 15 and August 15, commencing on February 15, 2025.
2026 Secured Notes Tender Offer and Redemption. Concurrently with closing the offering of 2029 Secured Notes, Summit Holdings and Finance Corp. consummated a cash tender offer to purchase any and all of the outstanding 2026 Secured Notes. Summit Holdings and Finance Corp. accepted for payment and made payment for $649.8 million aggregate principal amount of
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the 2026 Secured Notes validly tendered in the 2026 Notes Tender Offer. On July 26, 2024, concurrently with consummation of the 2026 Secured Notes Tender Offer, Summit Holdings and Finance Corp. delivered a notice of redemption to holders of 2026 Secured Notes for the redemption of all $114.7 million aggregate principal amount of 2026 Secured Notes not purchased in the 2026 Secured Notes Tender Offer, at a price equal to 102.125% of the principal amount thereof, plus accrued and unpaid interest to the redemption date (which was October 15, 2024). On July 26, 2024, concurrently with delivery of the notice of redemption, Summit Holdings and Finance Corp. irrevocably deposited $121.2 million in aggregate principal amount of non-callable United States Treasury securities, which included amounts for principal, interest, and premium with the trustee to satisfy and discharge the 2026 Secured Notes until redeemed on October 15, 2024 with the funds deposited with the trustee. On
October 15, 2024, the 2026 Secured Notes were fully repaid.
2025 Senior Notes Redemption. On July 17, 2024, Summit Holdings and Finance Corp. delivered a conditional notice of redemption to holders of 2025 Senior Notes for the redemption of all $49.8 million aggregate principal amount of outstanding 2025 Senior Notes, at a price equal to 100.000% of the principal amount thereof, plus accrued and unpaid interest to the redemption date, which was conditioned on the closing of the offering of 2029 Secured Notes. On July 26, 2024, concurrently with closing of the offering of 2029 Secured Notes, Summit Holdings and Finance Corp. irrevocably deposited $50.6 million in aggregate principal amount of non-callable United States Treasury securities, which included amounts for principal and interest with the trustee to satisfy and discharge the 2025 Senior Notes until redeemed with the funds deposited with the trustee. On
August 16, 2024, the 2025 Senior Notes were fully repaid.
Conclusion of Strategic Alternatives Review . In connection with the announcement of the Utica Sale, we also announced the conclusion of the strategic alternative review process undertaken by our Board of Directors that was previously announced on October 3, 2023. While we have concluded our active process, we remain open to all potential value-enhancing transactions.
Capital structure optimization and portfolio management . We intend to continue to improve our capital structure in the future by reducing our indebtedness with free cash flow, and when appropriate, we may pursue opportunistic transactions with the objective of increasing long term shareholder value. This may include opportunistic acquisitions, divestitures, re-allocation of capital to new or existing areas, and development of joint ventures involving our existing midstream assets or new investment opportunities. We believe that our current cash balance, internally generated cash flow, our Amended and Restated ABL Facility, the Permian Credit Facility, and access to debt or equity will be adequate to finance our strategic initiatives. To attain our overall corporate strategic objectives, we may conduct an asset divestiture, or divestitures, at a transaction valuation that is less than the net book value of the divested asset. For additional information, see Note 17 – Subsequent Events.
Ongoing impact of political and economic conditions and events in foreign oil and natural gas producing countries on commodity prices. Although we operate solely in the United States, certain events and conditions in foreign oil and natural gas producing countries, such as the continued conflict in the Middle East, including the Hamas-Israel war, the Hezbollah-Israel conflict, and Russia’s invasion of Ukraine, could have potential effects on us, including, but not limited to, volatility in currencies and commodity prices, higher inflation, cost and supply chain pressures and availability and disruptions in banking systems and capital markets. As of the date of filing, there have been no material impacts to us.
Impact of increases in interest rates. Increases in interest rates could adversely affect our future ability to obtain financing or materially increase the cost of existing and any additional financing. Since March 2022, the Federal Reserve has raised its target range for the federal funds rate multiple times to a current target range of 4.50% to 4.75%, and the timing of any potential further increases or decreases remains uncertain. As of September 30, 2024, we had approximately $689.7 million principal of fixed-rate debt, $150.0 million outstanding under our variable rate Amended and Restated ABL Facility and $133.3 million outstanding under the variable rate Permian Transmission Term Loan (see Note 8 - Debt). As of September 30, 2024, we had $120.0 million of interest rate exposure hedged to offset the impact of changes in interest rates on our Permian Transmission Term Loan.
How We Evaluate Our Operations
Prior to the Utica Sale and Mountaineer Transaction, we conducted and reported our operations in the midstream energy industry through five reportable segments: Northeast, Rockies, Permian, Piceance and Barnett. Each of our reportable segments provides midstream services in a specific geographic area and our reportable segments reflect the way in which we internally report the financial information used to make decisions and allocate resources in connection with our operations. For additional information see Note 16 - Segment Information.
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Our management uses a variety of financial and operational metrics to analyze our consolidated and segment performance. We view these metrics as important factors in evaluating our profitability. These metrics include:
• throughput volume;
• revenues;
• operation and maintenance expenses;
• capital expenditures; and
• segment adjusted EBITDA.
We review these metrics on a regular basis for consistency and trend analysis. There have been no changes in the composition or characteristics of these metrics during the three and nine months ended September 30, 2024.
Additional Information. For additional information, see the “Results of Operations” section herein and the notes to the unaudited condensed consolidated financial statements. For additional information on how these metrics help us manage our business, see the “How We Evaluate Our Operations” section of MD&A included in the 2023 Annual Report. For information on impending accounting changes that are expected to materially impact our financial results reported in future periods, see Note 2 – Summary of Significant Accounting Policies and Recently Issued Accounting Standards Applicable to the Company.
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Results of Operations
Consolidated Overview for the Three and Nine Months Ended September 30, 2024 and 2023
The following table presents certain consolidated financial and operating data.
Three Months Ended September 30, Nine Months Ended September 30,
2024 2023 2024 2023
(In thousands)
Revenues:
Gathering services and related fees $ 44,013 $ 66,035 $ 151,211 $ 180,492
Natural gas, NGLs and condensate sales 48,243 45,120 145,294 130,365
Other revenues 10,159 10,038 26,096 20,728
Total revenues
102,415 121,193 322,601 331,585
Costs and expenses:
Cost of natural gas and NGLs 28,246 27,110 88,047 77,967
Operation and maintenance 24,473 26,161 72,925 75,291
General and administrative 12,419 11,098 41,368 31,897
Depreciation and amortization 23,540 30,778 75,324 90,734
Transaction costs 2,094 144 13,156 926
Acquisition integration costs — 171 40 2,396
(Gain) loss on asset sales, net (6) (40) 1 (183)
Long-lived asset impairment — — 67,936 455
Total costs and expenses
90,766 95,422 358,797 279,483
Other income (expense), net 666 (315) 2,784 747
Gain (loss) on interest rate swaps (2,574) 2,856 936 4,851
Gain (loss) on sale of business (1,672) (9) 82,338 (45)
Gain on sale of equity method investment — — 126,261 —
Interest expense (25,712) (34,568) (95,015) (103,966)
Loss on early extinguishment of debt (42,235) — (47,199) —
Equity method investees income 4,910 10,211 19,828 22,302
Income (loss) before income taxes (54,968) 3,946 53,737 (24,009)
Income tax benefit (expense)
(142,573) (72) (142,129) 180
Net income (loss) $ (197,541) $ 3,874 $ (88,392) $ (23,829)
Volume throughput (1) :
Aggregate average daily throughput - natural gas (MMcf/d)
667 1,352 903 1,249
Aggregate average daily throughput - liquids (Mbbl/d)
70 85 73 76
________
(1) Excludes volume throughput for Ohio Gathering and Double E. For additional information, see the Northeast and Permian sections herein under the caption “Segment Overview for the Three and Nine Months Ended September 30, 2024 and 2023”.
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Volumes – Gas. Natural gas throughput volumes decreased 685 MMcf/d for the three months ended September 30, 2024 compared to the three months ended September 30, 2023, primarily reflecting:
• a volume throughput decrease of 752 MMcf/d for the Northeast segment.
• a volume throughput increase of 11 MMcf/d for the Rockies segment.
• a volume throughput decrease of 29 MMcf/d for the Piceance segment.
• a volume throughput increase of 85 MMcf/d for the Barnett segment.
Natural gas throughput volumes decreased 346 MMcf/d for the nine months ended September 30, 2024 compared to the nine months ended September 30, 2023, primarily reflecting:
• a volume throughput decrease of 389 MMcf/d for the Northeast segment.
• a volume throughput increase of 19 MMcf/d for the Rockies segment.
• a volume throughput decrease of 4 MMcf/d for the Piceance segment.
• a volume throughput increase of 28 MMcf/d for the Barnett segment.
Volumes – Liquids. Crude oil and produced water throughput volumes at the Rockies segment decreased for the three months ended September 30, 2024, compared to the three months ended September 30, 2023, primarily as a result of natural production declines, offset by 25 new well connections that came online subsequent to September 30, 2023.
Crude oil and produced water throughput volumes at the Rockies segment decreased for the nine months ended September 30, 2024, compared to the nine months ended September 30, 2023, primarily as a result of natural production declines, offset by 25 new well connections that came online subsequent to September 30, 2023.
For additional information on volumes, see the “Segment Overview for the Three and Nine Months Ended September 30, 2024 and 2023” section herein.
Revenues. Total revenues decreased $18.8 million during the three months ended September 30, 2024 compared to the three months ended September 30, 2023, comprised of a $22.0 million decrease in gathering services and related fees, offset by a $3.1 million increase in natural gas, NGLs and condensate sales, a $0.1 million increase in other revenue.
Gathering Services and Related Fees . Gathering services and related fees decreased $22.0 million compared to the three months ended September 30, 2023, primarily reflecting:
• a $3.1 million decrease in the Rockies, primarily due to decreased volume throughput;
• a $18.2 million decrease in the Northeast, primarily due to the sale of the Mountaineer Midstream system and the disposition of Summit Utica;
• a $3.1 million decrease in the Piceance, primarily due to decreased volume throughput and contractual step-downs; and
• a $2.3 million increase in the Barnett, primarily due to increased volume throughput.
Natural Gas, NGLs and Condensate Sales . Natural gas, NGLs and condensate revenues increased $3.1 million compared to the three months ended September 30, 2023, primarily reflecting:
• a $3.8 million increase in the Rockies, primarily due to increased volume throughput.
Total revenues decreased $9.0 million during the nine months ended September 30, 2024 compared to the nine months ended September 30, 2023, comprised of a $29.3 million decrease in gathering services and related fees, offset by a $14.9 million increase in natural gas, NGLs and condensate sales and a $5.4 million increase in other revenue.
Gathering Services and Related Fees . Gathering services and related fees decreased $29.3 million compared to the nine months ended September 30, 2023, primarily reflecting:
• a $24.9 million decrease in the Northeast, primarily due to the sale of the Mountaineer Midstream system and the disposition of Summit Utica; and
• a $3.7 million decrease in the Piceance, primarily due to contractual step-downs; offset by increased volume throughput.
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Natural Gas, NGLs and Condensate Sales . Natural gas, NGLs and condensate revenues increased $14.9 million compared to the nine months ended September 30, 2023, primarily reflecting:
• a $17.0 million increase in the Rockies, primarily due to increased volume throughput; and
• a $1.8 million decrease in the Piceance; primarily due to lower commodity prices; partially offset by increased volume throughput.
Costs and Expenses. Total costs and expenses decreased $4.7 million during the three months ended September 30, 2024 compared to the three months ended September 30, 2023.
Total costs and expenses increased $79.3 million during the nine months ended September 30, 2024 compared to the nine months ended September 30, 2023.
Cost of Natural Gas and NGLs . Cost of natural gas and NGLs increased $1.1 million for the three months ended September 30, 2024, compared to the three months ended September 30, 2023.
Cost of natural gas and NGLs increased $10.1 million for the nine months ended September 30, 2024, compared to the nine months ended September 30, 2023.
Operation and Maintenance . Operation and maintenance expense decreased $1.7 million for the three months ended September 30, 2024, compared to the three months ended September 30, 2023.
Operation and maintenance expense decreased $2.4 million for the nine months ended September 30, 2024, compared to the nine months ended September 30, 2023.
Long-lived asset impairments . During the quarterly period ended March 31, 2024, we recognized an impairment charge of $67.9 million in connection with the Mountaineer Transaction.
Interest Expense . Interest expense decreased $8.9 million for the three months ended September 30, 2024, compared to three months ended September 30, 2023, primarily due to $10.5 million of reduced interest expense as a result of the 2026 Secured Notes Tender Offer and Asset Sale Offer that occurred in July 2024 and May 2024, respectively, $4.5 million of reduced interest expense as a result of decreased borrowings on the Amended and Restated ABL Facility and $3.4 million of reduced interest expense as a result of the exchange and repurchase of $209.7 million of the 2025 Senior Notes that occurred in November 2023, partially offset by $8.9 million of increased borrowing costs in connection with issuance of the 2029 Secured Notes in July 2024.
Interest expense decreased $9.0 million for the nine months ended September 30, 2024, compared to nine months ended September 30, 2023, primarily due to $12.3 million of reduced interest expense as a result of decreased borrowings on the Amended and Restated ABL Facility, $9.6 million of reduced interest expense as a result of the 2026 Secured Notes Tender Offer and Asset Sale Offer that occurred in July 2024 and May 2024, respectively and $9.4 million of reduced interest expense as a result of the exchange and repurchase of $209.7 million of the 2025 Senior Notes that occurred in November 2023, partially offset by $12.0 million of increased borrowing costs on the 2026 Unsecured Notes issued in November 2023 and $9.0 million of increased borrowing costs on the 2029 Secured Notes issued in July 2024.
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Segment Overview for the Three and Nine Months Ended September 30, 2024 and 2023
Northeast.
Volume throughput for the Northeast reportable segment follows.
Northeast
Three Months Ended September 30, Nine Months Ended September 30,
2024 2023 Percentage
Change 2024 2023 Percentage
Change
Average daily throughput (MMcf/d) — 752 * 269 658 *
Average daily throughput (MMcf/d) (Ohio Gathering) — 870 * 283 763 *
* Not considered meaningful
On March 22, 2024, we completed the disposition of Summit Utica, the owner of our equity method investment, Ohio Gathering, and on May 1, 2024, we completed the disposition of our Mountaineer Midstream system.
Volume throughput for the Northeast, excluding Ohio Gathering, decreased for the three and nine months ended September 30, 2024, compared to the three and nine months ended September 30, 2023, primarily due to the sale of our Mountaineer Midstream system and the disposition of Summit Utica as discussed above.
Volume throughput for the Ohio Gathering system decreased for the three and nine months ended September 30, 2024, compared to the three and nine months ended September 30, 2023, primarily due to the disposition of Summit Utica, which owns an interest in the Ohio Gathering system.
Financial data for our Northeast reportable segment follows.
Northeast
Three Months Ended September 30, Nine Months Ended September 30,
2024 2023 Percentage
Change 2024 2023 Percentage
Change
(In thousands) (In thousands)
Revenues:
Gathering services and related fees $ — $ 18,157 * $ 18,851 $ 43,717 *
Total revenues
— 18,157 * 18,851 43,717 *
Costs and expenses:
Operation and maintenance — 2,094 * 2,259 6,204 *
General and administrative — 205 * 220 607 *
Depreciation and amortization — 4,435 * 4,248 13,319 *
Gain on asset sales, net — — * (21) (7) *
Long-lived asset impairment — — * 67,916 — *
Total costs and expenses
— 6,734 * 74,622 20,123 *
Add:
Depreciation and amortization
— 4,435 4,248 13,319
Adjustments related to capital reimbursement activity
— (20) — (61)
Gain on asset sales, net
— — (21) (7)
Long-lived asset impairment — — 67,916 —
Proportional adjusted EBITDA for Ohio Gathering (1)
— 11,913 14,282 28,832
Other — — (20) 129
Segment adjusted EBITDA
$ — $ 27,751 * $ 30,634 $ 65,806 *
* Not considered meaningful
(1) The Partnership recorded its financial results of its investment in Ohio Gathering on a one-month lag based on financial information available to us during the reporting period. With the divestiture of Ohio Gathering in March 2024, proportional adjusted EBITDA includes financial results from December 1, 2023 through March 22, 2024 ($2.5 million for March 1, 2024 - March 22, 2024).
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Three and nine months ended September 30, 2024 . Segment adjusted EBITDA decreased $27.8 million and $35.2 million, compared to the three and nine months ended September 30, 2023, respectively, primarily as the result of the sale of our Mountaineer Midstream system and the disposition of Summit Utica, the owner of our equity method investment, Ohio Gathering.
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Rockies.
Volume throughput for our Rockies reportable segment follows.
Rockies
Three Months Ended September 30, Nine Months Ended September 30,
2024 2023 Percentage
Change 2024 2023 Percentage
Change
Aggregate average daily throughput - natural gas (MMcf/d)
128 117 9% 127 108 18%
Aggregate average daily throughput - liquids (Mbbl/d)
70 85 (18%) 73 76 (4%)
Natural gas . Natural gas volume throughput increased for the three and nine months ended September 30, 2024, compared to the three and nine months ended September 30, 2023, primarily reflecting 123 new well connections that came online subsequent to September 30, 2023, partially offset by winter related interruptions which occurred during the first quarter of 2024.
For the three months ended September 30, 2024 and 2023, costs of natural gas and NGLs includes $13.5 million and $10.1 million, respectively, of gathering fees collected under percentage of proceeds arrangements.
For the nine months ended September 30, 2024 and 2023, costs of natural gas and NGLs includes $36.0 million and $30.6 million, respectively, of gathering fees collected under percentage of proceeds arrangements.
Liquids . Liquids volume throughput decreased for the three and nine months ended September 30, 2024, compared to the three and nine months ended September 30, 2023, primarily due to natural production declines, offset by 25 new well connections that came online subsequent to September 30, 2023.
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Financial data for our Rockies reportable segment follows.
Rockies
Three Months Ended September 30, Nine Months Ended September 30,
2024 2023 Percentage
Change 2024 2023 Percentage
Change
(In thousands) (In thousands)
Revenues:
Gathering services and related fees $ 15,302 $ 18,383 (17)% $ 48,141 $ 48,595 (1%)
Natural gas, NGLs and condensate sales 47,733 43,967 9% 142,917 125,871 14%
Other revenues 4,615 5,541 (17)% 12,044 8,885 36%
Total revenues
67,650 67,891 —% 203,102 183,351 11%
Costs and expenses:
Cost of natural gas and NGLs 28,029 26,693 5% 87,139 75,977 15%
Operation and maintenance 12,088 13,494 (10%) 37,159 37,739 (2%)
General and administrative 1,050 1,272 (17%) 3,532 3,013 17%
Depreciation and amortization 9,143 9,228 (1%) 27,178 26,241 4%
Integration costs — 49 * — 511 *
(Gain) loss on asset sales, net (6) — * 30 (111) *
Long-lived asset impairment — — * 20 455 (96%)
Total costs and expenses
50,304 50,736 (1%) 155,058 143,825 8%
Add:
Depreciation and amortization
9,143 9,228 27,178 26,241
Integration costs — 49 — 511
Adjustments related to capital reimbursement activity
(1,645) (1,434) (4,702) (1,905)
(Gain) loss on asset sales, net
(6) — 30 (111)
Long-lived asset impairment — — 20 455
Other 12 — 12 269
Segment adjusted EBITDA
$ 24,850 $ 24,998 (1)% $ 70,582 $ 64,986 9%
* Not considered meaningful
Three and nine months ended September 30, 2024 . Segment adjusted EBITDA increased $5.6 million, compared to the nine months ended September 30, 2023, primarily as a result of increased natural gas throughput as described above, partially offset by the decrease in liquids throughput and lower natural gas and NGL pricing.
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Permian.
Volume throughput for our Permian reportable segment follows.
Permian
Three Months Ended September 30, Nine Months Ended September 30,
2024 2023 Percentage
Change 2024 2023 Percentage
Change
Average daily throughput (MMcf/d) (Double E) 661 327 102% 559 278 101%
Volume throughput for Double E increased for the three and nine months ended September 30, 2024, compared to the three and nine months ended September 30, 2023.
The following table presents the MVC quantities that Double E’s shippers have contracted to with firm transportation service agreements and related negotiated rate agreements:
(Amounts in MMBTU/day) Weighted average MVC quantities for the year ended December 31,
2024 1,008,587
2025 1,068,630
2026 1,115,000
2027 1,115,000
2028 1,115,000
2029 1,115,000
2030 1,115,000
2031 1,009,521
2032 240,000
2033 240,000
2034 105,753
2035 9,863
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Financial data for our Permian reportable segment follows.
Permian
Three Months Ended September 30, Nine Months Ended September 30,
2024 2023 Percentage
Change 2024 2023 Percentage
Change
(In thousands) (In thousands)
Revenues:
Other revenues $ 910 $ 893 2% $ 2,731 $ 2,678 2%
Total revenues
910 893 2% 2,731 2,678 2%
Costs and expenses:
General and administrative 24 58 (59)% 117 218 (46)%
Transaction costs — — * — 75 *
Total costs and expenses
24 58 (59)% 117 293 (60)%
Add:
Transaction costs — — — 75
Proportional adjusted EBITDA for Double E 7,586 5,005 52% 20,820 13,823 51%
Segment adjusted EBITDA
$ 8,472 $ 5,840 45% $ 23,434 $ 16,283 44%
*Not considered meaningful
Three and nine months ended September 30, 2024 . Segment adjusted EBITDA increased $2.6 million and $7.2 million, compared to the three and nine months ended September 30, 2023, primarily as a result of an increase in proportional adjusted EBITDA from our equity method investment in Double E.
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Piceance.
Volume throughput for our Piceance reportable segment follows.
Piceance
Three Months Ended September 30, Nine Months Ended September 30,
2024 2023 Percentage
Change 2024 2023 Percentage
Change
Aggregate average daily throughput (MMcf/d)
284 313 (9%) 295 299 (1%)
Volume throughput decreased for the three and nine months ended September 30, 2024, compared to the three and nine months ended September 30, 2023, primarily as a result of natural production declines, offset by 21 new well connections that came online subsequent to September 30, 2023.
Financial data for our Piceance reportable segment follows.
Piceance
Three Months Ended September 30, Nine Months Ended September 30,
2024 2023 Percentage
Change 2024 2023 Percentage
Change
(In thousands) (In thousands)
Revenues:
Gathering services and related fees $ 17,604 $ 20,658 (15%) $ 56,054 $ 59,791 (6%)
Natural gas, NGLs and condensate sales
510 937 (46)% 2,124 3,913 (46)%
Other revenues 1,492 1,569 (5)% 3,971 4,368 (9)%
Total revenues
19,606 23,164 (15%) 62,149 68,072 (9%)
Costs and expenses:
Cost of natural gas and NGLs 219 417 (47)% 895 1,990 (55)%
Operation and maintenance 6,011 5,962 1% 17,435 18,138 (4)%
General and administrative 319 275 16% 932 793 18%
Depreciation and amortization 10,524 12,949 (19%) 31,521 38,728 (19%)
Gain on asset sales, net — (6) * (8) (10) (20%)
Total costs and expenses
17,073 19,597 (13)% 50,775 59,639 (15)%
Add:
Depreciation and amortization
10,524 12,949 31,521 38,728
Adjustments related to capital reimbursement activity
(298) (1,325) (2,211) (3,828)
Gain on asset sales, net
— (6) (8) (10)
Other 72 107 236 317
Segment adjusted EBITDA
$ 12,831 $ 15,292 (16%) $ 40,912 $ 43,640 (6%)
________
*Not considered meaningful
Three and nine months ended September 30, 2024 . Segment adjusted EBITDA decreased $2.5 million and $2.7 million, compared to the three and nine months ended September 30, 2023 primarily related to the contractual step-downs.
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Barnett.
Volume throughput for our Barnett reportable segment follows.
Barnett
Three Months Ended September 30, Nine Months Ended September 30,
2024 2023 Percentage
Change 2024 2023 Percentage
Change
Average daily throughput (MMcf/d) 255 170 50% 212 184 15%
Volume throughput increased for the three and nine months ended September 30, 2024, compared to the three and nine months ended September 30, 2023, primarily as a result of 27 new well connections that came online subsequent to September 30, 2023, partially offset by temporary production curtailments associated with reductions in commodity pricing.
Financial data for our Barnett reportable segment follows.
Barnett
Three Months Ended September 30, Nine Months Ended September 30,
2024 2023 Percentage
Change 2024 2023 Percentage
Change
(In thousands) (In thousands)
Revenues:
Gathering services and related fees $ 11,107 $ 8,837 26% $ 28,165 $ 28,389 (1%)
Natural gas, NGLs and condensate sales — 216 (100%) 253 581 (56%)
Other revenues (1)
3,142 2,035 54% 6,625 4,835 37%
Total revenues
14,249 11,088 29% 35,043 33,805 4%
Costs and expenses:
Operation and maintenance 6,546 4,575 43% 15,982 13,205 21%
General and administrative 321 332 (3%) 967 925 5%
Depreciation and amortization 3,841 3,803 1% 11,481 11,406 1%
Gain on asset sales, net — (33) (100%) — (47) (100%)
Total costs and expenses
10,708 8,677 23% 28,430 25,489 12%
Add:
Depreciation and amortization
4,076 4,038 12,185 12,110
Adjustments related to capital reimbursement activity
(339) (332) (1,000) (984)
Gain on asset sales, net
— (33) — (47)
Other — — — 985
Segment adjusted EBITDA
$ 7,278 $ 6,084 20% $ 17,798 $ 20,380 (13)%
________
*Not considered meaningful
(1) Includes the amortization expense associated with our favorable gas gathering contracts as reported in Other revenues.
Three and nine months ended September 30, 2024 . Segment adjusted EBITDA increased $1.2 million compared to the three months ended September 30, 2023, primarily as a result of increase throughput discussed above. Segment adjusted EBITDA decreased $2.6 million, compared to the nine months ended September 30, 2023, primarily as a result of production curtailments discussed above and unfavorable margin mix, partially offset by increased volume throughput.
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Corporate and Other Overview for the Three and Nine Months Ended September 30, 2024 and 2023
Corporate and Other represents those results that are not specifically attributable to a reportable segment or that have not been allocated to our reportable segments, including certain general and administrative expense items, transaction costs, acquisition integration costs and interest expense. Corporate and Other includes intercompany eliminations.
Corporate and Other
Three Months Ended September 30, Nine Months Ended September 30,
2024 2023 Percentage
Change 2024 2023 Percentage
Change
(In thousands) (In thousands)
Costs and expenses:
General and administrative $ 10,705 $ 8,956 20% $ 35,600 $ 26,341 35%
Transaction costs 2,094 144 * 13,156 851 *
Interest expense 25,712 34,568 (26)% 95,015 103,966 (9)%
________
* Not considered meaningful
General and administrative . General and administrative expenses increased by $1.7 million and $9.3 million for the three and nine months ended September 30, 2024, compared to the three months ended September 30, 2023, respectively, primarily due to increased employee salaries and benefit expense, as well as professional and other expenses associated with our Corporate Reorganization.
Transaction costs. Transaction costs in 2024 are primarily related to the Utica Sale that closed on March 22, 2024, the Mountaineer Transaction that closed on May 1, 2024 and the costs incurred in connection with our Corporate Reorganization and strategic alternatives review.
Interest expense . Interest expense decreased $8.9 million for the three months ended September 30, 2024, compared to three months ended September 30, 2023, primarily due to $10.5 million of reduced interest expense as a result of the 2026 Secured Notes Tender Offer and Asset Sale Offer that occurred in July 2024 and May 2024, respectively, $4.5 million of reduced interest expense as a result of decreased borrowings on the Amended and Restated ABL Facility and $3.4 million of reduced interest expense as a result of the exchange and repurchase of $209.7 million of the 2025 Senior Notes that occurred in November 2023, partially offset by $8.9 million of increased borrowing costs in connection with issuance of the 2029 Secured Notes in July 2024.
Interest expense decreased $9.0 million for the nine months ended September 30, 2024, compared to nine months ended September 30, 2023, primarily due to $12.3 million of reduced interest expense as a result of decreased borrowings on the Amended and Restated ABL Facility, $9.6 million of reduced interest expense as a result of the 2026 Secured Notes Tender Offer and Asset Sale Offer that occurred in July 2024 and May 2024, respectively and $9.4 million of reduced interest expense as a result of the exchange and repurchase of $209.7 million of the 2025 Senior Notes that occurred in November 2023, partially offset by $12.0 million of increased borrowing costs on the 2026 Unsecured Notes issued in November 2023 and $9.0 million of increased borrowing costs on the 2029 Secured Notes issued in July 2024.
Liquidity and Capital Resources
We rely primarily on internally generated cash flows as well as current cash balance and external financing sources, including commercial bank borrowings, and the issuance of debt, equity and preferred equity securities, and proceeds from potential asset divestitures to fund our capital expenditures. We believe that our Amended and Restated ABL Facility and Permian Transmission Credit Facility, together with internally generated cash flows, current cash balance and access to debt or equity capital markets, will be adequate to finance our operations for the next twelve months without adversely impacting our liquidity.
We may enter into off-balance sheet arrangements and transactions that can give rise to material off-balance sheet obligations. As of September 30, 2024, our material off-balance sheet arrangements and transactions include (i) letters of credit outstanding against our Amended and Restated ABL Facility aggregating to $0.8 million, and (ii) letters of credit outstanding against our Permian Transmission Credit Facility aggregating to $10.5 million. There are no other transactions, arrangements or other relationships with unconsolidated entities or other persons that are reasonably likely to materially affect our liquidity or availability of our capital resources.
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We are in compliance with all covenants contained in the 2029 Secured Notes, the Amended and Restated ABL Facility and the Permian Transmission Credit Facility. The Amended and Restated ABL Facility requires that Summit Holdings not permit (i) the First Lien Net Leverage Ratio as of the last day of any fiscal quarter to be greater than 2.50:1.00, or (ii) the Interest Coverage Ratio (as defined in the Amended and Restated ABL Agreement) as of the last day of any fiscal quarter to be less than 2.00:1.00. As of September 30, 2024, the First Lien Net Leverage Ratio and the Interest Coverage Ratio was 0.84:1.00 and 2.42:1.00, respectively.
ABL Facility. Concurrently with the issuance of the 2029 Secured Notes, on July 26, 2024, Summit Holdings, as borrower, amended and restated its existing first-lien, senior secured credit agreement, with the Partnership, consisting of a $500.0 million asset-based revolving credit facility. As of September 30, 2024, the Amended and Restated ABL Facility will mature on the earliest of (a) July 26, 2029, (b) July 31, 2029 if either (i) the outstanding amount of the 2029 Secured Notes (or any refinancing debt permitted under the Amended and Restated ABL Facility in respect thereof that has a final maturity date, scheduled amortization or any other scheduled repayment, mandatory prepayment, mandatory redemption or sinking fund obligation prior to the date that is 91 days after the Amended and Restated ABL Termination Date (provided, that the terms of such permitted refinancing debt may (x) require the payment of interest from time to time and (y) include customary mandatory redemptions, prepayments or offers to purchase with proceeds of asset sales or upon the occurrence of a change of control)) on such date equals or exceeds $50.0 million or (ii) the outstanding amount of such debt described in clause (i) above on such date is less than $50.0 million and Liquidity (as defined in the Amended and Restated ABL Agreement) at any time on or after such date is less than the sum of (A) such outstanding amount and (B) the greater of (x) 10% of the aggregate Commitments (as defined in the Amended and Restated ABL Agreement) then in effect and (y) $50.0 million, and (c) any date on which the aggregate Commitments terminate thereunder. As of September 30, 2024, there was $150.0 million outstanding under the Amended and Restated ABL Facility and the available borrowing capacity totaled $349.2 million after giving effect to the issuance thereunder of $0.8 million of outstanding but undrawn irrevocable standby letters of credit.
2029 Secured Notes . On July 26, 2024, Summit Holdings issued $575.0 million aggregate principal amount of 8.625% Senior Secured Second Lien Notes due 2029. The 2029 Secured Notes are guaranteed on a senior second-priority basis by Summit Midstream Corporation and certain of Summit Midstream Corporation’s existing and future subsidiaries and are secured on a second-priority basis by substantially the same collateral that is pledged for the benefit of the lenders under the Amended and Restated ABL Facility. The 2029 Secured Notes mature on October 31, 2029 and have interest payable semi-annually in arrears on each February 15 and August 15, commencing on February 15, 2025. As of September 30, 2024, the outstanding balance of the 2029 Secured Notes was $575.0 million.
Other. We may in the future use a combination of cash, secured or unsecured borrowings and issuances of our common stock or other securities and the proceeds from asset sales to retire or refinance our outstanding debt or Series A Preferred Stock through privately negotiated transactions, open market repurchases, redemptions, exchange offers, tender offers or otherwise, but we are under no obligation to do so.
Cash Flows
The components of the net change in cash and cash equivalents were as follows:
Nine Months Ended September 30,
2024 2023
(In thousands)
Net cash provided by operating activities $ 40,124 $ 110,759
Net cash provided by (used in) investing activities 659,412 (55,846)
Net cash used in financing activities (571,815) (49,549)
Net change in cash, cash equivalents and restricted cash
$ 127,721 $ 5,364
Operating activities.
Cash flows provided by operating activities for the nine months ended September 30, 2024 primarily reflected:
• a net loss of $88.4 million plus positive adjustments of $158.6 million for non-cash operating items; and
• a $30.1 million change in working capital accounts.
Cash flows provided by operating activities for the nine months ended September 30, 2023 primarily reflected:
• a net loss of $23.8 million plus adjustments of $127.9 million for non-cash operating items; and
• a $6.7 million change in working capital accounts.
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Investing activities.
Cash flows provided by investing activities during the nine months ended September 30, 2024 primarily reflected:
• $332.7 million of cash inflows from the proceeds of the sale Ohio Gathering;
• $292.3 million of cash inflows from the proceeds of the Utica Sale (excluding Ohio Gathering);
• $69.3 million of cash inflows from the proceeds of the Mountaineer Transaction;
• $4.4 million of cash inflows from the sale of compressor equipment; and
• $37.9 million of cash outflows for capital expenditures.
Cash flows used in investing activities during the nine months ended September 30, 2023 primarily reflected:
• $49.9 million of cash outflows for capital expenditures; and
• $3.5 million for cash investments in the Double E Project.
Financing activities.
Cash flows used in financing activities during the nine months ended September 30, 2024 primarily reflected:
• $649.8 million of cash outflows for the redemption of Secured Notes;
• $313.0 million of cash outflows for repayments on the Amended and Restated ABL Facility;
• $209.5 million of cash outflows from the redemption of 2026 Unsecured Notes;
• $49.8 million of cash outflows from the 2025 Notes Redemption;
• $21.4 million of cash outflows for debt extinguishment costs;
• $13.6 million of cash outflows for the Excess Cash Flow Offer;
• $11.6 million of cash outflows for repayments on the Permian Transmission Term Loan; and
• $6.9 million of cash outflows for the Asset Sale Offer; partially offset by
• $565.8 million of cash inflows from the issuance of the 2029 Secured Notes;
• $150.0 million of cash inflows from borrowings on the Amended and Restated ABL Facility.
Cash flows used in financing activities during the nine months ended September 30, 2023 primarily reflected:
• $70.0 million of cash outflows for repayments on the Amended and Restated ABL Facility;
• $7.8 million of cash outflows for repayments on the Permian Transmission Term Loan; offset by
• $35.0 million of cash inflows from borrowings on the Amended and Restated ABL Facility.
Capital Requirements
Our business is capital intensive, requiring significant investment for the maintenance of existing gathering systems and the acquisition or construction and development of new gathering systems and other midstream assets and facilities. Our Partnership Agreement required that we categorize our capital expenditures as either:
• maintenance capital expenditures, which are cash expenditures (including expenditures for the addition or improvement to, or the replacement of, our capital assets or for the acquisition of existing, or the construction or development of, new capital assets) made to maintain our long-term operating income or operating capacity; or
• expansion capital expenditures, which are cash expenditures incurred for acquisitions or capital improvements that we expect will increase our operating income or operating capacity over the long term.
In connection with the consummation of the Corporate Reorganization, the Partnership Agreement was amended to, among other things, reflect that all of the issued and outstanding limited partnership interests of the Partnership are held by Summit Midstream Corporation. For information on the Corporate Reorganization, see Note 1 – Organization, Business Operations, Corporate Reorganization and Presentation and Consolidation.
For the nine months ended September 30, 2024, cash paid for capital expenditures totaled $37.9 million which included $7.4 million of maintenance capital expenditures. For the nine months ended September 30, 2024, we did not make any contributions to Ohio Gathering and we contributed $1.4 million to Double E.
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We rely primarily on internally generated cash flows, our current cash balance as well as external financing sources, including commercial bank borrowings and the issuance of debt, equity and preferred equity securities, and proceeds from potential asset divestitures to fund our capital expenditures. We believe that our internally generated cash flows, current cash balance, our Amended and Restated ABL Facility and the Permian Transmission Credit Facility, and access to debt or equity capital markets, will be adequate to finance our operations for the next twelve months without adversely impacting our liquidity.
There are a number of risks and uncertainties that could cause our current expectations to change, including, but not limited to, (i) the ability to reach agreements with third parties; (ii) prevailing conditions and outlook in the natural gas, crude oil and NGLs and markets, and (iii) our ability to obtain financing from commercial banks, the capital markets, or other financing sources.
Credit and Counterparty Concentration Risks
We examine the creditworthiness of counterparties to whom we extend credit and manage our exposure to credit risk through credit analysis, credit approval, credit limits and monitoring procedures, and for certain transactions, we may request letters of credit, prepayments or guarantees.
Certain of our customers may be temporarily unable to meet their current obligations. While this may cause disruption to cash flows, we believe that we are properly positioned to deal with the potential disruption because the vast majority of our gathering assets are strategically positioned at the beginning of the midstream value chain. The majority of our infrastructure is connected directly to our customers’ wellheads and pad sites, which means our gathering systems are typically the first third-party infrastructure through which our customers’ commodities flow and, in many cases, the only way for our customers to get their production to market.
We have exposure due to nonperformance under our MVC contracts whereby a potential customer, may not have the wherewithal to make its MVC shortfall payments when they become due. We typically receive payment for all prior-year MVC shortfall billings in the quarter immediately following billing. Therefore, our exposure to risk of nonperformance is limited to and accumulates during the current year-to-date contracted measurement period.
Off-Balance Sheet Arrangements
During the three and nine months ended September 30, 2024, there were no material changes to the off-balance sheet obligations disclosed in our 2023 Annual Report.
Critical Accounting Estimates
We prepare our financial statements in accordance with GAAP. These principles are established by the FASB. We employ methods, estimates and assumptions based on currently available information when recording transactions resulting from business operations. There have been no significant changes to our critical accounting estimates from those disclosed on 2023 Annual Report.
Forward-Looking Statements
Investors are cautioned that certain statements contained in this report as well as in periodic press releases and certain oral statements made by our officers and employees during our presentations are “forward-looking” statements. Forward-looking statements include, without limitation, any statement that may project, indicate or imply future results, events, performance or achievements and may contain the words “expect,” “intend,” “plan,” “anticipate,” “estimate,” “believe,” “will be,” “will continue,” “will likely result,” and similar expressions, or future conditional verbs such as “may,” “will,” “should,” “would,” and “could.” In addition, any statement concerning future financial performance (including future revenues, earnings or growth rates), ongoing business strategies or prospects, and possible actions taken by us or our subsidiaries are also forward-looking statements. These forward-looking statements involve various risks and uncertainties, including, but not limited to, those described in Part II. Item 1A. Risk Factors included in this report.
Forward-looking statements are based on current expectations and projections about future events and are inherently subject to a variety of risks and uncertainties, many of which are beyond the control of our management team. All forward-looking statements in this report and subsequent written and oral forward-looking statements attributable to us, or to persons acting on our behalf, are expressly qualified in their entirety by the cautionary statements in this paragraph. These risks and uncertainties include, among others:
• our ability and the time required to consummate the Transaction;
• our ability to achieve the strategic and other objectives relating to the proposed Transaction;
• the risk that regulatory approvals for the Transaction are not obtained or are obtained subject to conditions that are not anticipated;
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• the risk that we are unable to integrate Tall Oak’s operations in a successful manner and in the expected time period;
• our decision whether to pay, or our ability to grow, our cash dividends;
• fluctuations in natural gas, NGLs and crude oil prices, including as a result of political or economic measures taken by various countries or OPEC;
• the extent and success of our customers’ drilling and completion efforts, as well as the quantity of natural gas, crude oil, freshwater deliveries, and produced water volumes produced within proximity of our assets;
• failure or delays by our customers in achieving expected production in their natural gas, crude oil and produced water projects;
• competitive conditions in our industry and their impact on our ability to connect hydrocarbon supplies to our gathering and processing assets or systems;
• actions or inactions taken or nonperformance by third parties, including suppliers, contractors, operators, processors, transporters and customers, including the inability or failure of our shipper customers to meet their financial obligations under our gathering agreements and our ability to enforce the terms and conditions of certain of our gathering agreements in the event of a bankruptcy of one or more of our customers;
• our ability to divest of certain of our assets to third parties on attractive terms, which is subject to a number of factors, including prevailing conditions and outlook in the natural gas, NGL and crude oil industries and markets;
• the ability to attract and retain key management personnel;
• commercial bank and capital market conditions and the potential impact of changes or disruptions in the credit and/or capital markets;
• changes in the availability and cost of capital and the results of our financing efforts, including availability of funds in the credit and/or capital markets;
• restrictions placed on us by the agreements governing our debt and preferred equity instruments;
• the availability, terms and cost of downstream transportation and processing services;
• natural disasters, accidents, weather-related delays, casualty losses and other matters beyond our control;
• the current and potential future impact of pandemics on our business, results of operations, financial position or cash flows;
• operational risks and hazards inherent in the gathering, compression, treating and/or processing of natural gas, crude oil and produced water;
• our ability to comply with the terms of the agreements comprising the Global Settlement;
• weather conditions and terrain in certain areas in which we operate;
• physical and financial risks associated with climate change;
• any other issues that can result in deficiencies in the design, installation or operation of our gathering, compression, treating, processing and freshwater facilities;
• timely receipt of necessary government approvals and permits, our ability to control the costs of construction, including costs of materials, labor and rights-of-way and other factors that may impact our ability to complete projects within budget and on schedule;
• our ability to finance our obligations related to capital expenditures, including through opportunistic asset divestitures or joint ventures and the impact any such divestitures or joint ventures could have on our results;
• the effects of existing and future laws and governmental regulations, including environmental, safety and climate change requirements and federal, state and local restrictions or requirements applicable to oil and/or gas drilling, production or transportation;
• the effects of litigation;
• interest rates;
• changes in general economic conditions; and
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• certain factors discussed elsewhere in this report.
Developments in any of these areas could cause actual results to differ materially from those anticipated or projected or cause a significant reduction in the market price of our common stock, Series A Preferred Stock and 2029 Secured Notes.
The foregoing list of risks and uncertainties may not contain all of the risks and uncertainties that could affect us. In addition, in light of these risks and uncertainties, the matters referred to in the forward-looking statements contained in this document may not in fact occur. Accordingly, undue reliance should not be placed on these statements. We undertake no obligation to publicly update or revise any forward-looking statements as a result of new information, future events or otherwise, except as otherwise required by law.
Information About Us
Investors should note that we make available, free of charge on our website at www.summitmidstream.com, our annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and any amendments to those reports as soon as reasonably practicable after we electronically file such material with, or furnish it to, the SEC. We also post announcements, updates, events, investor information and presentations on our website in addition to copies of all recent news releases. We may use the Investors section of our website to communicate with investors. It is possible that the financial and other information posted there could be deemed to be material information. Documents and information on our website are not incorporated by reference herein.
The SEC maintains a website at www.sec.gov that contains reports, proxy and information statements, and other information regarding issuers, including us, that file electronically with the SEC.
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Text extracted from the filing as submitted to EDGAR. Formatting, tables and exhibits are simplified for reading; the original document is authoritative for anything you rely on.