{"id":450383,"date":"2021-03-04T06:48:35","date_gmt":"2021-03-04T11:48:35","guid":{"rendered":"http:\/\/www.marketnewsdesk.com\/?p=450383"},"modified":"2021-03-04T06:48:35","modified_gmt":"2021-03-04T11:48:35","slug":"summit-midstream-partners-lp-reports-fourth-quarter-2020-financial-and-operating-results-and-confirms-2021-financial-guidance","status":"publish","type":"post","link":"https:\/\/www.marketnewsdesk.com\/index.php\/summit-midstream-partners-lp-reports-fourth-quarter-2020-financial-and-operating-results-and-confirms-2021-financial-guidance\/","title":{"rendered":"Summit Midstream Partners, LP Reports Fourth Quarter 2020 Financial and Operating Results and Confirms 2021 Financial Guidance"},"content":{"rendered":"
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– Fourth quarter 2020 net income of $103.0 million, adjusted EBITDA of $61.8 million and Distributable Cash Flow (“DCF”) of $44.8 million<\/h2>\n

– Reiterating full year 2021 adjusted EBITDA guidance of $210 million to $230 million and capital expenditure guidance of $20 million to $35 million<\/h2>\n

– Reiterating expectation to generate sufficient cash in 2021, after interest expense and capital expenditures, to reduce outstanding indebtedness by approximately $130 million to $150 million<\/h2>\n

– Expect to fully finance SMLP’s estimated 2021 Double E investment of $150 million with funds from $175 million of new non-recourse senior secured credit facilities at Summit Permian Transmission, LLC<\/h2>\n

– Retired $351 million of SMLP’s recourse fixed capital obligations at a weighted average discount of 67% and completed consensual debt discharge and restructuring of SMP Holdings’ $155.2 million term loan<\/h2>\n

– Executed an amendment to SMLP’s revolving credit facility, which includes a new $400 million junior lien debt basket and a less restrictive 5.75x total leverage covenant<\/h2>\n

– Double E received FERC’s Notice to Proceed with construction in January 2021<\/h2>\n

PR Newswire<\/p>\n<\/p><\/div>\n

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\n HOUSTON<\/span>, March 4, 2021<\/span> \/PRNewswire\/ — Summit Midstream Partners, LP (NYSE: SMLP) (“Summit”, “SMLP” or the “Partnership”) announced today its financial and operating results for the three months ended December 31, 2020<\/span>, including net income of $103.0 million<\/span>, adjusted EBITDA of $61.8 million<\/span> and DCF of $44.8 million<\/span>.\u00a0 Net income for the quarter included a $124.1 million<\/span> gain from early extinguishment of debt related to the open market repurchase of senior unsecured notes and the consensual debt discharge and restructuring of a subsidiary’s $155.2 million<\/span> term loan (“GP Term Loan Restructuring”), partially offset by non-cash charges for a $17.0 million<\/span> loss contingency and a $5.1 million<\/span> asset impairment related to an $8.0 million<\/span> sale of compressor equipment, which closed in January 2021.\u00a0 <\/p>\n

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\n \"Summit
\n <\/a>\n <\/p>\n<\/p><\/div>\n

Fourth quarter 2020 operated natural gas volume throughput averaged 1,436 million cubic feet per day (“MMcf\/d”) and liquids volume throughput averaged 71 thousand barrels per day (“Mbbl\/d”).\u00a0 Operated natural gas volumes increased by 3.2% relative to the third quarter of 2020, largely due to a volume increase of 91 MMcf\/d in the Utica Shale segment from a combination of a customer returning 22 MMcf\/d of temporarily shut-in production at the end of the third quarter, and seven new well connections in September, partially offset by modest volume throughput declines in other reportable segments.\u00a0 Throughput volumes for the Ohio Gathering segment increased by 42 MMcf\/d, net to Summit, or 21.3% over the third quarter of 2020, due to the return of substantially all temporarily shut-in production and higher volumes from 15 new wells that were connected late in the third quarter.\u00a0 Quarterly liquids volume throughput increased by 2.9% over the third quarter of 2020, primarily due to eight new wells that were turned in line during the quarter.<\/p>\n

\n Heath Deneke<\/span>, President, Chief Executive Officer and Chairman, commented, “Summit’s fourth quarter financial results were in line with expectations, and adjusted EBITDA was $2 million<\/span> ahead of third quarter results. Our full year results fell within our guidance range of $250 million<\/span> to $260 million<\/span> that we established in July 2020<\/span>, to reflect the implications of the global COVID-19 pandemic, lower commodity prices and a slowdown of upstream activity behind our systems.\u00a0 The strong performance of our Utica Shale and Ohio Gathering segments drove overall quarter-over-quarter increases in adjusted EBITDA and volume throughput.\u00a0 On an aggregate basis, these two segments contributed an incremental $2.6 million<\/span> of quarterly adjusted EBITDA relative to the third quarter of 2020, and each segment had quarterly volume throughput growth of more than 20%.\u00a0 Additionally, with the return of substantially all shut-in production behind the Ohio Gathering system in November, we no longer have any material amount of production that is temporarily shut-in for economic purposes behind any of our assets.”<\/p>\n

“We executed a number of liability management transactions in the fourth quarter, including the repurchase of $95.6 million<\/span> face value of our 2025 notes, a cash tender for $75.1 million<\/span> of our Series A Preferred Units, and the closing of the transformational GP Term Loan Restructuring.\u00a0 In total, since closing the GP Buy-In in May 2020<\/span>, we have eliminated more than $625 million<\/span> of recourse fixed capital obligations at SMLP, including the $180.8 million<\/span> DPPO, and we extinguished our GP’s $155.2 million<\/span> term loan, all at substantial discounts to par.\u00a0 As a result of these actions, our organizational structure and capital structure have been significantly simplified.\u00a0 In December 2020<\/span>, we completed an amendment to our revolving credit facility that provides additional flexibility to support the next phase of our liability management initiatives.\u00a0 The newly added $400 million<\/span> junior lien debt basket can be utilized to address our 2022 bond maturities and the increased total leverage covenant of 5.75x provides SMLP with additional cushion to mitigate future uncertainty.” <\/p>\n

“We continue to make great progress on the Double E project, having received all necessary approvals to proceed with construction, and securing bank financing commitments.\u00a0 Now that we have received the Notice to Proceed from the FERC, we have initiated construction activities and we expect to bring the project online during the fourth quarter of 2021. \u00a0We continue to expect that Double E will be completed at or below the current $425 million<\/span> capital budget, of which, approximately $35 million<\/span> currently remains in unidentified project contingency.\u00a0 In the fourth quarter of 2020, SMLP contributed approximately $6.6 million<\/span> of cash for its 70% share of Double E capital contributions, resulting in SMLP funding approximately $20 million<\/span> during the calendar year 2020, and approximately $131 million<\/span> of total funding from the project’s inception through the end of 2020. \u00a0In 2021, we expect to finance SMLP’s estimated $150 million<\/span> share of Double E capital expenditures with funds from the $175 million<\/span> of new, non-recourse senior secured credit facilities which have been committed by leading commercial banks.”<\/p>\n

“In 2020, we successfully executed a robust set of liability management transactions that strengthened the balance sheet and created financial flexibility to offset the potential for a prolonged challenging macro environment, while generating long term value for our unitholders.\u00a0 We expect that 2021 will be a trough year for Summit, as many of our customers have significantly reduced drilling and completion activities behind our systems, particularly during the first half of the year.\u00a0 As a result, we expect approximately 45 to 75 new well connections in 2021, which is materially less than the 104 and 262 wells connected in 2020 and 2019, respectively. \u00a0We also anticipate MVC shortfall payment step-downs of approximately $10 million<\/span> in 2021, relative to 2020, primarily from customers in the Piceance and Williston<\/span> segments.\u00a0 Accordingly, we issued our 2021 adjusted EBITDA guidance range of $210 million<\/span> to $230 million<\/span>, which includes a moderate amount of risking to our customer-provided development plans and volume forecasts at the midpoint of the range,\u00a0 Further risking of these plans reflect the low end of the range and if our customers achieve their stated plans, we would expect our financial results to be at the high end of the range.”<\/p>\n

“Although we are expecting softened customer activity in 2021, we expect to generate sufficient cash, after interest expense and capital expenditures, to reduce outstanding indebtedness by approximately $130 million<\/span> to $150 million<\/span> due to the resiliency of our business model.\u00a0 While it is too early to provide guidance for 2022, we foresee several tailwinds that we believe will support increased customer activity behind our systems, including an improving outlook on oil and gas prices, more constructive capital markets and the potential for additional consolidation activity in the upstream sector, all of which should further strengthen customer balance sheets.\u00a0 In the meantime, we will remain focused on maximizing free cash flow, further de-levering the balance sheet and implementing plans to address our upcoming 2022 debt maturities.”<\/p>\n

\n 2021 Financial Guidance<\/b>\n <\/p>\n

SMLP is reiterating its financial guidance for full year 2021 that was released on February 16, 2021<\/span>, and included the following guidance ranges:<\/p>\n