Log in
E-mail
Password
Show password
Remember
Forgot password ?
Become a member for free
Sign up
Sign up
New member
Sign up for FREE
New customer
Discover our services
Settings
Settings
Dynamic quotes 
OFFON

SUMMIT MIDSTREAM PARTNERS, LP

(SMLP)
  Report
Delayed Quote. Delayed Nyse - 10/15 04:10:00 pm
36.63 USD   -2.53%
10/13Energy Stocks Slip Premarket Wednesday
MT
10/13SUMMIT MIDSTREAM PARTNERS LP : Energy
MT
10/13SUMMIT MIDSTREAM PARTNERS LP : Units Launch $700 Million Debt Offering
MT
SummaryQuotesChartsNewsRatingsCalendarCompanyFinancialsConsensusRevisions 
SummaryMost relevantAll NewsAnalyst Reco.Other languagesPress ReleasesOfficial PublicationsSector news

SUMMIT MIDSTREAM PARTNERS LP : Management's Discussion and Analysis of Financial Condition and Results of Operations. (form 10-Q)

08/09/2021 | 06:06am EDT
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 Partnership and its
subsidiaries for the periods since December 31, 2020. As a result, the following
discussion should be read in conjunction with the 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 Annual Report on Form 10-K for the year
ended December 31, 2020 (the "2020 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
Forward-Looking Statements. Actual results may differ materially from those
contained in any forward-looking statements.
Overview
We are a value-driven limited partnership 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.
We classify our midstream energy infrastructure assets into two categories, our
Core Focus Areas and our Legacy Areas. Further details on our Focus Areas and
Legacy Areas are summarized below.
•Core Focus Areas. Core producing areas of basins in which we expect our
gathering systems to experience greater long-term growth, driven by our
customers' ability to generate more favorable returns and support sustained
drilling and completion activity in varying commodity price environments. In the
near-term, we expect to concentrate the majority of our capital expenditures in
our Core Focus Areas. Our Utica Shale, Ohio Gathering, Williston Basin, DJ Basin
and Permian Basin reportable segments (as described below) comprise our Core
Focus Areas.
•Legacy Areas. Production basins in which we expect volume throughput on our
gathering systems to experience relatively lower long-term growth compared to
our Core Focus Areas, given that our customers require relatively higher
commodity prices to support drilling and completion activities in these basins.
Upstream production served by our gathering systems in our Legacy Areas is
generally more mature, as compared to our Core Focus Areas, and the decline
rates for volume throughput on our gathering systems in the Legacy Areas are
typically lower as a result. We expect to continue to decrease our near-term
capital expenditures in these Legacy Areas. Our Piceance Basin, Barnett Shale
and Marcellus Shale reportable segments (as described below) comprise our Legacy
Areas.
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 Williston Basin, Piceance Basin, and Permian Basin segments,
(ii) the sale of natural gas we retain from certain Barnett Shale customers and
(iii) the sale of condensate we retain from our gathering services in the
Piceance Basin segment. During the three and six months ended June 30, 2021,
these additional activities accounted for approximately 16% and 19% of total
revenues, respectively.
We also have indirect exposure to changes in commodity prices in 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.
                                       24
--------------------------------------------------------------------------------
  Table of Contents
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 Six Months Ended June 30, 2021 and 2020"
section included herein.
                                              Three Months Ended June 30,                  Six Months Ended June 30,
                                                2021                  2020                 2021                  2020
                                                                          (In thousands)
Net income (loss)                        $       (19,738)         $  56,721          $      (10,750)         $   60,483
Reportable segment adjusted EBITDA
Utica Shale                              $        10,652          $  10,693          $       18,372          $   16,621
Ohio Gathering                                     6,841              7,514                  13,713              15,453
Williston Basin                                    9,626             12,727                  20,431              28,919
DJ Basin                                           5,106              4,339                  10,453              10,250
Permian Basin                                        461              1,828                   1,170               3,409
Piceance Basin                                    20,324             21,734                  41,358              45,291
Barnett Shale                                      8,889              8,510                  16,905              17,270
Marcellus Shale                                    5,868              4,888                  11,469              10,208

Net cash provided by operating
activities                               $        34,787          $  35,170          $       86,217          $  105,371
Capital expenditures (1)                           3,352              8,843                   5,962              27,426
Investment in Double E equity method
investee (2)                                      43,324             21,695                  48,943              79,728

Borrowings under Revolving Credit
Facility                                               -             35,000                       -              90,000
Repayments on Revolving Credit Facility          (40,000)                 -                 (95,000)            (34,000)
Repayment of SMP Holdings Term Loan                    -             (5,500)                      -              (6,300)
Borrowings under Permian Transmission
Credit Facility                                   36,000                  -                  53,500
Repurchase of Senior Notes                             -            (76,707)                      -             (76,707)
Proceeds from issuance of Subsidiary
Series A preferred units, net of
issuance costs                                         -             14,764                       -              47,810
Purchase of common units in GP Buy-In
Transaction                                            -            (41,778)                      -             (41,778)


(1)See "Liquidity and Capital Resources" herein to the unaudited condensed
consolidated financial statements for additional information on capital
expenditures.
(2)Inclusive of $0.6 million and nil of capitalized interest for the three
months ended June 30, 2021 and 2020 respectively, and $1.6 million and $0.3
million for the six months ended June 30, 2021 and 2020 respectively.
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 the COVID-19 pandemic and its effect on demand and prices for
oil;
•Natural gas, NGL and crude oil supply and demand dynamics;
•Production from U.S. shale plays;
•Capital markets availability and cost of capital; and
•Shifts in operating costs and inflation.
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 2020
Annual Report.
Ongoing impact of the COVID-19 pandemic and its effect on demand and prices for
oil. We continue to closely monitor the impact of the COVID-19 pandemic on all
aspects of our business, including how it has impacted and will impact our
customers,
                                       25
--------------------------------------------------------------------------------
  Table of Contents
employees, supply chain and distribution network. We are unable to predict the
ultimate impact that COVID-19, and related factors may have on our business,
future results of operations, financial position or cash flows.
In response to the COVID-19 pandemic, we have modified our business practices,
including restricting employee travel, utilizing COVID-19 pandemic tax relief
(as allowed by the Consolidated Appropriations Act, 2021, the "ERC Tax Credit"),
modifying employee work locations, implementing social distancing and enhancing
sanitary measures in our facilities. Our increased reliance on remote access to
our information systems increases our exposure to potential cybersecurity
breaches. We may take further actions as government authorities require or
recommend or as we determine to be in the best interests of our employees,
customers, partners and suppliers. In addition to the significant reduction in
global demand for oil and natural gas caused by the economic effects of the
COVID-19 pandemic, we also experienced more oil price volatility during 2020,
largely due to a macro supply and demand imbalance and actions by members of
OPEC and other foreign, oil-exporting countries. This disrupted the oil and
natural gas exploration and production industry and other industries that serve
exploration and production companies. These industry conditions, coupled with
those resulting from the COVID-19 pandemic, could lead to significant global
economic contraction generally and in our industry in particular.
Over the past year, we have collaborated extensively with our customer base
regarding production reductions and delays to drilling and completion activities
in light of the current commodity price backdrop and COVID-19 pandemic. Given
continued volatility in market conditions since March 2020, and based on
recently updated production forecasts and revised 2021 development plans from
our customers, we currently expect our 2021 results to continue to be affected
by more moderated drilling and completion activity, relative to historical
periods.
Winter Storm Uri. Due to the diverse geographic footprint of our operations
outside of Texas, the extreme winter weather event that occurred in February
2021 ("Winter Storm Uri") did not have a material impact on our aggregate volume
throughput during the six months ended June 30, 2021. Some of the steps taken
during or prior to Winter Storm Uri to mitigate the storm's financial impact
remain subject to risks, including counterparty financial risk, potential
disputed transactions and potential legislative or regulatory action in response
to, or litigation arising out of, the unprecedented circumstances of the winter
storm, which could affect our future earnings, cash flows and financial
condition.
Debt maturities. The Partnership's wholly owned subsidiary, Summit Holdings, has
a senior secured revolving credit facility due May 13, 2022 (the "Revolving
Credit Facility"). The 2022 maturity date of our Revolving Credit Facility
resulted in the inclusion of this outstanding indebtedness balance into our
going concern assessment for the quarterly period ended June 30, 2021. As a
result, the lack of sufficient available liquidity to satisfy amounts due under
our Revolving Credit Facility has raised substantial doubt about our ability to
continue as a going concern.
How We Evaluate Our Operations
Each of our reportable segments provides midstream services in a specific
geographic area. 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 15 -
Segment Information.
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 and determining the amounts of cash
distributions to pay to our unitholders. These metrics include:
•throughput volume;
•revenues;
•operation and maintenance expenses; 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 six months ended June 30, 2021.
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 2020 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 Partnership.

                                       26

--------------------------------------------------------------------------------

Table of Contents

                             Results of Operations
Consolidated Overview for the Three and Six Months Ended June 30, 2021 and 2020
The following table presents certain consolidated financial and operating data.
                                                  Three Months Ended June 30,                 Six Months Ended June 30,
                                                    2021                  2020                 2021                  2020
                                                        (In thousands)                              (In thousands)
Revenues:

Gathering services and related fees $ 74,233 $ 73,911 $ 144,580 $ 157,703 Natural gas, NGLs and condensate sales

                16,416             10,683                  37,180             24,463
Other revenues                                         9,392              7,413                  17,599             14,744
Total revenues                                       100,041             92,007                 199,359            196,910
Costs and expenses:
Cost of natural gas and NGLs                          16,626              6,088                  37,102             14,313
Operation and maintenance                             17,507             21,152                  34,100             42,963
General and administrative (2)                        29,360             12,786                  39,938             29,347
Depreciation and amortization                         28,364             29,630                  56,875             59,296
Transaction costs                                        450              1,207                     217              1,218
Gain on asset sales, net                                  (4)              (281)                   (140)              (166)
Long-lived asset impairment                               33                654                   1,525              4,475
Total costs and expenses                              92,336             71,236                 169,617            151,446
Other income (expense), net                           (2,334)               276                  (2,284)              (151)
Loss on ECP Warrants                                 (12,159)                 -                 (13,634)                 -
Interest expense                                     (15,502)           (21,990)                (29,455)           (45,818)
Gain on early extinguishment of debt                       -             54,235                       -             54,235
Income (loss) before income taxes and
equity method investment income                      (22,290)            53,292                 (15,631)            53,730
Income tax benefit                                       248                389                     262                402
Income from equity method investees                    2,304              3,040                   4,619              6,351
Net income (loss)                            $       (19,738)         $  

56,721 $ (10,750) $ 60,483


Volume throughput (1):
Aggregate average daily throughput - natural
gas (MMcf/d)                                           1,441              1,391                   1,393              1,336
Aggregate average daily throughput - liquids
(Mbbl/d)                                                  63                 76                      64                 87


(1)Exclusive of volume throughput for Ohio Gathering. For additional
information, see the "Ohio Gathering" section herein.
(2)Inclusive of a $19.3 million incremental loss contingency accrual during the
three months ended June 30, 2021 related to the 2015 Blacktail Release (See Note
13 - Commitments and Contingencies for additional information).
Volumes - Gas.
Natural gas throughput volumes increased 50 MMcf/d for the three months
ended June 30, 2021 compared to the three months ended June 30, 2020, primarily
reflecting:
•a volume throughput increase of 80 MMcf/d for the Utica Shale segment;
•a volume throughput decrease of 41 MMcf/d for the Piceance Basin segment;
•a volume throughput decrease of 5 MMcf/d for the Barnett Shale segment;
•a volume throughput increase of 18 MMcf/d for the Marcellus Shale segment; and
                                       27
--------------------------------------------------------------------------------
  Table of Contents
•a volume throughput decrease of 3 MMcf/d for the Permian Basin segment.
Natural gas throughput volumes increased 57 MMcf/d for the six months
ended June 30, 2021 compared to the six months ended June 30, 2020, primarily
reflecting:
•a volume throughput increase of 134 MMcf/d for the Utica Shale segment;
•a volume throughput decrease of 41 MMcf/d for the Piceance Basin segment;
•a volume throughput decrease of 23 MMcf/d for the Barnett Shale segment;
•a volume throughput decrease of 4 MMcf/d for the Marcellus Shale segment; and
•a volume throughput decrease of 4 MMcf/d for the Permian Basin segment.
Volumes - Liquids.
Crude oil and produced water throughput volumes at the Williston segment
decreased 13 Mbbl/d and 23 Mbbl/d, respectively, for the three and six months
ended June 30, 2021, compared to the three and six months ended June 30, 2020,
primarily as a result of natural production declines as well as a lower number
of new well connects.
For additional information on volumes, see the "Segment Overview for the Three
and Six Months Ended June 30, 2021 and 2020" section herein.
Revenues. Total revenues increased $8.0 million during the three months ended
June 30, 2021 compared to the prior year period, comprised of a $5.7 million
increase in natural gas, NGLs and condensate sales, a $0.3 million increase in
gathering services and related fees and a $2.0 million increase in Other
Revenues.
Gathering Services and Related Fees. Gathering services and related fees
increased $0.3 million compared to the three months ended June 30, 2020.
Gas, NGLs and Condensate Sales. Natural gas, NGLs and condensate revenues
increased $5.7 million compared to the three months ended June 30, 2020,
reflecting:
•a $5.1 million increase in revenues in the Williston Basin;
•a $2.7 million increase in revenues in the Permian Basin; offset by
•a $2.8 million decrease in revenues in the Barnett Shale.
Total revenues increased $2.4 million during the six months ended June 30, 2021
compared to the prior year period, primarily comprised of a $12.7 million
increase in natural gas, NGLs and condensate sales, a $2.9 million increase in
Other Revenues, offset by a $13.1 million decrease in gathering services and
related fees.
Gathering Services and Related Fees. Gathering services and related fees
decreased $13.1 million compared to the six months ended June 30, 2020,
primarily reflecting:
•an $11.1 million decrease in gathering services and related fees in the
Williston Basin, primarily due to lower liquids volume throughput and the
expiration of a customer's minimum volume commitment. Lower volumes are
primarily associated with natural production declines as well as a lower number
of new well connects during the period;
•a $3.1 million decrease in gathering services and related fees in the Piceance
Basin related to lower volume throughput due to a lack of drilling and
completion activity and natural production declines; and
•a partially offsetting $1.4 million increase in gathering services and related
fees in the Utica Shale, primarily as a result of the completion of new wells
that were commissioned in March 2021, partially offset by natural production
declines on existing wells.
Natural Gas, NGLs and Condensate Sales. Natural gas, NGLs and condensate
revenues increased $12.7 million compared to the six months ended June 30, 2020,
reflecting:
•a $13.0 million increase in revenues in the Williston Basin;
•a $4.7 million increase in revenues in the Permian Basin; and
•a $1.5 million increase in revenues in the Piceance Basin; partially offset by
•a $6.7 million decrease in revenues in the Barnett Shale.
Costs and Expenses. Total costs and expenses increased $21.1 million during the
three months ended June 30, 2021 compared to the three months ended June 30,
2020.
                                       28
--------------------------------------------------------------------------------
  Table of Contents
Total costs and expenses increased $18.2 million during the six months ended
June 30, 2021 compared to the six months ended June 30, 2020.
Cost of Natural Gas and NGLs. Cost of natural gas and NGLs increased $10.5
million for the three months ended June 30, 2021 compared to the three months
ended June 30, 2020, primarily driven by an increase in commodity prices.
Cost of natural gas and NGLs increased $22.8 million for the six months ended
June 30, 2021 compared to the six months ended June 30, 2020, primarily driven
by an increase in commodity prices.
Operation and Maintenance. Operation and maintenance expense decreased $3.6
million and $8.9 million for the three and six months ended June 30, 2021,
respectively, compared to the three and six months ended June 30, 2020,
primarily due to reduced employee headcount as a result of restructuring
activities implemented in the fourth quarter of 2020. The Partnership realized
$5.6 million of benefits during the six months ended June 30, 2021, that are not
otherwise expected to occur in 2022 and future periods, as a result of
commercial settlements and the ERC Tax Credit.
General and Administrative. General and administrative expense increased $16.6
million for the three months ended June 30, 2021 compared to the three months
ended June 30, 2020, primarily due to a $19.3 million loss contingency accrual
related to the 2015 Blacktail Release (see Note 13 - Commitments and
Contingencies for additional information), partially offset by the prior period
in 2020 reflecting higher restructuring and deal costs as well as a decrease in
salaries and benefits associated with lower headcount from our restructuring of
operations in late 2020 (the "2020 Restructuring Plan") and other cost-cutting
initiatives which were realized in the three months ended June 30, 2021.
General and administrative expense increased $10.6 million for the six months
ended June 30, 2021 compared to the six months ended June 30, 2020, primarily
due to the aforementioned loss contingency recognized for the 2015 Blacktail
Release, partially offset by the prior period in 2020 reflecting restructuring
and deal costs as well as a decrease in salaries and benefits associated with
lower headcount from our 2020 Restructuring Plan and other cost-cutting
initiatives which were realized in the six months ended June 30, 2021.
The Partnership realized $1.0 million of ERC Tax Credit benefits during the six
months ended June 30, 2021, that are not otherwise expected to occur in future
periods.
Depreciation and Amortization. Depreciation and amortization expense decreased
$1.3 million for the three months ended June 30, 2021 compared to the three
months ended June 30, 2020.
Depreciation and amortization expense decreased $2.4 million for the six months
ended June 30, 2021 compared to the six months ended June 30, 2020.
Interest Expense. The decrease in interest expense for the three and six months
ended June 30, 2021, compared to the three and six months ended June 30,
2020, was primarily due to lower debt balances associated
with the Partnership's liability management initiatives completed during
2020 which included (i) open market repurchases of its Senior Notes totaling
$234.2 million face value, (ii) cash tender offers of its Senior Notes totaling
$72.2 million, and (iii) the consensual debt discharge and restructuring of our
$155.2 SMPH Term Loan (the "TL Restructuring"). The decrease in interest expense
was partially offset by a higher outstanding balance on the Revolving Credit
Facility and a higher interest rate on the Revolving Credit Facility.

                                       29

--------------------------------------------------------------------------------

Table of Contents Segment Overview for the Three and Six Months Ended June 30, 2021 and 2020 Utica Shale. The Utica Shale reportable segment includes the Summit Utica system. Volume throughput for our Summit Utica system follows.

                                                                                              Utica Shale
                                        Three Months Ended June 30,                                            Six Months Ended June 30,
                                                                                   Percentage                                                            Percentage
                                      2021                       2020                Change                 2021                       2020                Change
Average daily throughput
(MMcf/d)                               496                        416                  19%                   453                        319                  42%


Volume throughput increased compared to the three and six month periods ended
June 30, 2021, as a result of the commissioning of new wells in 2020 which
resulted in a greater number of well connects during the three month period
ended March 31, 2021, compared to the same period in 2020, together with the
commencement of production from a new 4-well pad site during the three months
ended March 31, 2021. This increase was partially offset by natural production
declines from existing wells.

Financial data for our Utica Shale reportable segment follows.

                                                                                        Utica Shale
                                      Three Months Ended June 30,                                     Six Months Ended June 30,
                                                                              Percentage                                                     Percentage
                                        2021                 2020               Change                  2021                2020               Change
                                        (Dollars in thousands)                                          (Dollars in thousands)
Revenues:
Gathering services and related
fees                              $       11,349          $ 11,538               (2)%             $      19,920          $ 18,500                8%
Total revenues                            11,349            11,538               (2)%                    19,920            18,500                8%
Costs and expenses:
Operation and maintenance                    658               757               (13%)                    1,436             1,698               (15%)
General and administrative                    28                84               (67%)                       89               172               (48%)
Depreciation and amortization              1,928             1,920                 -                      3,854             3,847                 -
Gain on asset sales, net                       -               (42)                *                          -               (26)                *
Total costs and expenses                   2,614             2,719               (4%)                     5,379             5,691               (5%)
Add:
Depreciation and amortization              1,928             1,920                                        3,854             3,847
Adjustments related to capital
reimbursement activity                       (11)               (4)                                         (23)               (9)
Gain on asset sales, net                       -               (42)                                           -               (26)
Segment adjusted EBITDA           $       10,652          $ 10,693                0%              $      18,372          $ 16,621                11%


________
* Not considered meaningful
Three and six months ended June 30, 2021. Segment adjusted EBITDA remained
consistent and increased $1.8 million, respectively, compared to the three and
six months ended June 30, 2020 primarily as a result of the increased volume
throughput described above, partially offset by a higher mix of lower-margin
volumes on the system in the three months ended June 30, 2021.

                                       30
--------------------------------------------------------------------------------
  Table of Contents
Ohio Gathering. The Ohio Gathering reportable segment includes OGC and OCC. We
account for our investment in Ohio Gathering using the equity method and we
recognize our proportionate share of earnings or loss in net income on a
one-month lag based on the financial information available to us during the
reporting period.
Gross volume throughput for Ohio Gathering, based on a one-month lag follows.
                                                                                             Ohio Gathering
                                        Three Months Ended June 30,                                             Six Months Ended June 30,
                                                                                    Percentage                                                            Percentage
                                      2021                       2020                 Change                 2021                       2020                Change
Average daily throughput
(MMcf/d)                               514                        540                  (5)%                   536                        575                 (7)%


Volume throughput for the Ohio Gathering system decreased compared to the three
and six month periods ended June 30, 2020 as a result of natural production
declines on existing wells on the system.
Financial data for our Ohio Gathering reportable segment, based on a one-month
lag follows.
                                                                                  Ohio Gathering
                                 Three Months Ended June 30,                                  Six Months Ended June 30,
                                                                      Percentage                                                     Percentage
                                    2021              2020              Change                  2021                2020               Change
                                    (Dollars in thousands)                                      (Dollars in thousands)
Proportional adjusted EBITDA for
equity
method investees                 $  6,841          $ 7,514               (9%)             $      13,713          $ 15,453               (11%)
Segment adjusted EBITDA          $  6,841          $ 7,514               (9%)             $      13,713          $ 15,453               (11%)


Segment adjusted EBITDA for equity method investees decreased $0.7 million and
$1.7 million compared to the three and six months ended June 30, 2020 primarily
as a result of the lower volume throughput described above.

                                       31
--------------------------------------------------------------------------------
  Table of Contents
Williston Basin. The Polar and Divide, Bison Midstream and Meadowlark Midstream
systems provide our midstream services for the Williston Basin reportable
segment. Volume throughput for our Williston Basin reportable segment follows.
                                                                                            Williston Basin
                                        Three Months Ended June 30,                                            Six Months Ended June 30,
                                                                                   Percentage                                                            Percentage
                                      2021                       2020                Change                 2021                       2020                Change
Aggregate average daily
throughput -
natural gas (MMcf/d)                   12                         14                  (14%)                  12                         14                  (14%)

Aggregate average daily
throughput -
liquids (Mbbl/d)                       63                         76                  (17%)                  64                         87                  (26%)


Natural gas. Natural gas volume throughput decreased compared to the three and
six months ended June 30, 2020, primarily reflecting natural production
declines.
Liquids. Liquids volume throughput decreased compared to the three and six
months ended June 30, 2020, primarily associated with natural production
declines as well as a lower number of new well connects.
Financial data for our Williston Basin reportable segment follows.
                                                                                       Williston Basin
                                       Three Months Ended June 30,                                     Six Months Ended June 30,
                                                                               Percentage                                                     Percentage
                                         2021                 2020               Change                  2021                2020               Change
                                                    (Dollars in thousands)                                          (Dollars in thousands)
Revenues:
Gathering services and related
fees                               $       12,516          $ 12,407                1%              $      25,149          $ 36,204               (31%)
Natural gas, NGLs and condensate
sales                                       8,201             3,131               162%                    20,428             7,455               174%
Other revenues                              4,242             2,776                53%                     8,749             5,918                48%
Total revenues                             24,959            18,314                36%                    54,326            49,577                10%
Costs and expenses:
Cost of natural gas and NGLs                8,548               941               808%                    20,873             2,604               702%
Operation and maintenance                   5,483             5,827               (6%)                    10,407            12,549               (17%)
General and administrative                    332               492               (33%)                      686             1,030               (33%)
Depreciation and amortization               5,915             6,487               (9%)                    11,837            12,982               (9%)
Gain on asset sales, net                        -               (96)                *                        (15)              (47)                *
Long-lived asset impairment                    41                 9                 *                         41                 9                 *
Total costs and expenses                   20,319            13,660                49%                    43,829            29,127                50%
Add:
Depreciation and amortization               5,915             6,487                                       11,837            12,982
Adjustments related to MVC
shortfall payments                              -             2,124                                            -            (3,541)
Adjustments related to capital
reimbursement activity                       (970)             (451)                                      (1,929)             (934)
Gain on asset sales, net                        -               (96)                                         (15)              (47)
Long-lived asset impairment                    41                 9                                           41                 9
Segment adjusted EBITDA            $        9,626          $ 12,727               (24%)            $      20,431          $ 28,919               (29%)


_______
* Not considered meaningful
Three and six months ended June 30, 2021. Segment adjusted EBITDA decreased $3.1
million and $8.5 million respectively, compared to the three and six months
ended June 30, 2020 primarily due to lower liquids volume throughput on our
systems as previously discussed, partially offset by lower operating expenses
associated with our 2020 Restructuring Plan and other cost-cutting initiatives
and lower general operating expenses.
                                       32
--------------------------------------------------------------------------------
  Table of Contents
DJ Basin. The Niobrara G&P systems provide midstream services for the DJ Basin
reportable segment. Volume throughput for our DJ Basin reportable segment
follows.
                                                                                                         DJ Basin
                                                  Three Months Ended June 30,                                              Six Months Ended June 30,
                                                                                               Percentage                                                            Percentage
                                               2021                          2020                Change                 2021                       2020                Change
Average daily throughput
 (MMcf/d)                                        23                              20                15%                    23                         26                 (12%)


Volume throughput increased compared to the three months ended June 30, 2020,
and increased compared to the six months ended June 30, 2020, primarily as a
result of natural production declines and a decreased number of wells that were
commissioned during 2021, together with temporarily shut-in production that our
customers initiated in the prior-year period.
Financial data for our DJ Basin reportable segment follows.
                                                                                       DJ Basin
                                   Three Months Ended June 30,                                  Six Months Ended June 30,
                                                                        Percentage                                                     Percentage
                                      2021              2020              Change                  2021                2020               Change
                                                 (Dollars in thousands)                                      (Dollars in thousands)
Revenues:
Gathering services and related
fees                               $  5,891          $ 5,228                13%             $      12,154          $ 12,083                1%
Natural gas, NGLs and condensate
sales                                   305               71               330%                       415               141               194%
Other revenues                        1,856              993                87%                     2,560             2,027                26%
Total revenues                        8,052            6,292                28%                    15,129            14,251                6%
Costs and expenses:
Cost of natural gas and NGLs            214                2                 *                        230                11                 *
Operation and maintenance             1,882            2,354               (20%)                    3,794             4,870               (22%)
General and administrative            1,350              141               857%                     1,669               223               648%
Depreciation and amortization         1,544            1,502                3%                      3,096             3,029                2%
(Gain) loss on asset sales, net          (5)              20                 *                         (7)               20                 *
Long-lived asset impairment               -               57                 *                         95             3,692                 *
Total costs and expenses              4,985            4,076                 -                      8,877            11,845               (25%)

Add:

Depreciation and amortization         1,544            1,502                                        3,096             3,029
Adjustments related to capital
reimbursement activity                  500              544                                          994             1,103
(Gain) loss on asset sales, net          (5)              20                                           (7)               20
Long-lived asset impairment               -               57                                           95             3,692
Other                                     -                -                                           23                 -
Segment adjusted EBITDA            $  5,106          $ 4,339                18%             $      10,453          $ 10,250                2%


________

* Not considered meaningful
Three and six months ended June 30, 2021. Segment adjusted EBITDA increased $0.8
million and $0.2 million respectively, compared to the three and six months
ended June 30, 2020, primarily due to temporarily shut-in production that our
customers initiated in the prior-year period, together with lower operating
expenses associated with our 2020 Restructuring Plan and other cost-cutting
initiatives and lower general operating expenses partially offset by lower
volumes associated with natural declines.
                                       33
--------------------------------------------------------------------------------
  Table of Contents
Permian Basin. The Summit Permian system provides our midstream services for the
Permian Basin reportable segment. Volume throughput for our Permian Basin
reportable segment follows.
                                                                                             Permian Basin
                                        Three Months Ended June 30,                                             Six Months Ended June 30,
                                                                                    Percentage                                                            Percentage
                                      2021                       2020                 Change                 2021                       2020                Change
Average daily throughput
(MMcf/d)                                29                          32                 (9%)                    29                         33                 (12%)


Volume throughput decreased compared to the three and six months ended June 30,
2020, primarily as a result of natural production declines from wells previously
put in service.
Financial data for our Permian Basin reportable segment follows.
                                                                                    Permian Basin
                                   Three Months Ended June 30,                                  Six Months Ended June 30,
                                                                        Percentage                                                    Percentage
                                      2021              2020              Change                  2021                2020              Change
                                                 (Dollars in thousands)                                     (Dollars in thousands)
Revenues:
Gathering services and related
fees                               $  2,262          $ 2,711               (17%)            $       4,461          $ 5,022               (11%)
Natural gas, NGLs and condensate
sales                                 6,875            4,222                63%                    13,393            8,734                53%
Other revenues                          121              126               (4%)                       237              313               (24%)
Total revenues                        9,258            7,059                31%                    18,091           14,069                29%
Costs and expenses:
Cost of natural gas and NGLs          7,167            3,691                94%                    14,182            7,840                81%
Operation and maintenance             1,527            1,456                5%                      2,519            2,643               (5%)
General and administrative              118               84                40%                       235              177                33%
Depreciation and amortization         1,464            1,387                6%                      2,933            2,732                7%
Gain on asset sales, net                  -              (17)                *                          -              (13)                *
Long-lived asset impairment               -                -                                            -              182                 *
Total costs and expenses             10,276            6,601                56%                    19,869           13,561                47%

Add:

Depreciation and amortization         1,464            1,387                                        2,933            2,732
Gain on asset sales, net                  -              (17)                                           -              (13)
Long-lived asset impairment               -                -                                            -              182
Other                                    15                -                                           15                -
Segment adjusted EBITDA            $    461          $ 1,828               (75)%            $       1,170          $ 3,409               (66)%


________
*Not considered meaningful
Three and six months ended June 30, 2021. Segment adjusted EBITDA
decreased $1.4 million and $2.2 million respectively, compared to the three and
six months ended June 30, 2020, primarily reflecting lower volume throughput
across the system associated with natural production declines, together with an
increase in the cost of natural gas and NGLs, partially offset by increased
sales of natural gas, NGLs and condensate.

                                       34

--------------------------------------------------------------------------------

Table of Contents Piceance Basin. The Grand River system provides midstream services for the Piceance Basin reportable segment. Volume throughput for our Piceance Basin reportable segment follows.

                                                                                             Piceance Basin
                                        Three Months Ended June 30,                                             Six Months Ended June 30,
                                                                                    Percentage                                                            Percentage
                                      2021                       2020                 Change                 2021                       2020                Change
Aggregate average daily
throughput
(MMcf/d)                               326                        367                 (11%)                   334                        375                 (11%)


Volume throughput decreased compared to the three and six months ended June 30,
2020, primarily as a result of natural production declines and an absence of new
well connects in 2021.
Financial data for our Piceance Basin reportable segment follows.
                                                                                             Piceance Basin
                                            Three Months Ended June 30,                                     Six Months Ended June 30,
                                                                                    Percentage                                                     Percentage
                                              2021                 2020               Change                  2021                2020               Change
                                              (Dollars in thousands)                                          (Dollars in thousands)
Revenues:

Gathering services and related fees $ 25,527 $ 26,222

            (3%)             $      50,311          $ 53,411               

(6%)

Natural gas, NGLs and condensate
sales                                            1,025               401               156%                     2,878             1,404               105%
Other revenues                                   1,233             1,096                13%                     2,409             2,161                11%
Total revenues                                  27,785            27,719                0%                     55,598            56,976               (2%)
Costs and expenses:
Cost of natural gas and NGLs                       697               320               118%                     1,816               777               134%
Operation and maintenance                        5,367             5,267                2%                     10,309            10,205                1%
General and administrative                         345               276                25%                       643               561                15%
Depreciation and amortization                   10,757            11,306               (5%)                    21,631            22,604               (4%)
(Gain) loss on asset sales, net                      4               (83)                *                        (53)              (96)                *
Long-lived asset impairment                          -                 -                 *                        970                 -                 *
Total costs and expenses                        17,170            17,086                0%                     35,316            34,051                4%
Add:
Depreciation and amortization                   10,757            11,306                                       21,631            22,604
Adjustments related to MVC
shortfall payments                                   -               167                                            -               390
Adjustments related to capital
reimbursement activity                          (1,403)             (289)                                      (1,831)             (532)
(Gain) loss on asset sales, net                      4               (83)                                         (53)              (96)
Long-lived asset impairment                          -                 -                                          970                 -
Other                                              351                 -                                          359                 -
Segment adjusted EBITDA                 $       20,324          $ 21,734               (6%)             $      41,358          $ 45,291               (9%)


________
*Not considered meaningful
Three and six months ended June 30, 2021. Segment adjusted EBITDA decreased
$1.4 million and $3.9 million compared to the three and six months ended
June 30, 2020, primarily reflecting a decrease in volume throughput as a result
of natural production declines as discussed above.

                                       35
--------------------------------------------------------------------------------
  Table of Contents
Barnett Shale. The DFW Midstream system provides our midstream services for the
Barnett Shale reportable segment. Volume throughput for our Barnett Shale
reportable segment follows.
                                                                                       Barnett Shale
                                    Three Months Ended June 30,                                          Six Months Ended June 30,
                                                                               Percentage                                                         Percentage
                                  2021                       2020                Change               2021                      2020                Change
Average daily throughput
(MMcf/d)                           198                        203                 (2%)                 195                       218                (11%)


Volume throughput decreased compared to the three and six months ended June 30,
2020 reflecting an absence of new well connections in 2021 together with natural
production declines, partially offset by workovers and recompletions.
Financial data for our Barnett Shale reportable segment follows.
                                                                                     Barnett Shale
                                    Three Months Ended June 30,                                  Six Months Ended June 30,
                                                                         Percentage                                                     Percentage
                                       2021              2020              Change                  2021                2020               Change
                                                 (Dollars in thousands)                                       (Dollars in thousands)
Revenues:
Gathering services and related
fees                               $  10,076          $ 9,877                2%              $      19,772          $ 20,320               (3%)
Natural gas, NGLs and condensate
sales                                     10            2,858              (100%)                       66             6,729               (99%)
Other revenues (1)                     1,012            1,778               (43%)                    2,072             3,038               (32%)
Total revenues                        11,098           14,513               (24%)                   21,910            30,087               (27%)
Costs and expenses:
Cost of natural gas and NGLs               -            1,134              (100%)                        -             3,081              (100%)
Operation and maintenance              1,852            4,564               (59%)                    4,316             9,259               (53%)
General and administrative               260              513               (49%)                      495               891               (44%)
Depreciation and amortization          3,798            3,788                 -                      7,596             7,585                 -
(Gain) loss on asset sales, net          (11)             (42)                *                        (11)               17                 *
Long-lived asset impairment                -                -                 *                        289                 4                 *
Total costs and expenses               5,899            9,957               (41%)                   12,685            20,837               (39%)

Add:

Depreciation and amortization          4,032            4,023                                        8,064             8,055
Adjustments related to capital
reimbursement activity                  (331)             (27)                                        (662)              (56)
(Gain) loss on asset sales, net          (11)             (42)                                         (11)               17
Long-lived asset impairment                -                -                                          289                 4

Segment adjusted EBITDA            $   8,889          $ 8,510                4%              $      16,905          $ 17,270               (2)%


________

*Not considered meaningful
(1)Includes the amortization expense associated with our favorable gas gathering
contracts as reported in Other revenues.
Three and six months ended June 30, 2021. Segment adjusted EBITDA increased
$0.4 million compared to the three months ended June 30, 2020, primarily as a
result of lower operating expenses associated with our 2020 Restructuring Plan
together with other cost-cutting initiatives and lower general operating
expenses, including lower compression operating costs, partially offset by lower
volume throughput.

                                       36
--------------------------------------------------------------------------------
  Table of Contents
Marcellus Shale. The Mountaineer Midstream system provides our midstream
services for the Marcellus Shale reportable segment. Volume throughput for the
Marcellus Shale reportable segment follows.
                                                                                            Marcellus Shale
                                        Three Months Ended June 30,                                            Six Months Ended June 30,
                                                                                   Percentage                                                            Percentage
                                      2021                       2020                Change                 2021                       2020                Change
Average daily throughput
(MMcf/d)                               357                        339                  5%                    347                        351                 (1)%


Volume throughput increased compared to the three and six months ended June 30,
2020 primarily due to nine new wells that were commissioned behind our gathering
system in the three months ended June 30, 2021, partially offset by natural
production declines.
Financial data for our Marcellus Shale reportable segment follows.
                                                                                   Marcellus Shale
                                  Three Months Ended June 30,                                  Six Months Ended June 30,
                                                                       Percentage                                                     Percentage
                                     2021              2020              Change                  2021                2020               Change
                                                (Dollars in thousands)                                      (Dollars in thousands)
Revenues:
Gathering services and related
fees                              $  6,612          $ 5,928                12%             $      12,813          $ 12,163                5%
Total revenues                       6,612            5,928                12%                    12,813            12,163                5%
Costs and expenses:
Operation and maintenance              658              933               (29%)                    1,160             1,746               (34%)
General and administrative              76               97               (22%)                      165               190               (13%)
Depreciation and amortization        2,301            2,300                0%                      4,605             4,600                0%
(Gain) loss on asset sales, net          8                -                 *                        (54)                -                 *
Long-lived asset impairment             (8)               -                 *                        130                 -                 *
Total costs and expenses             3,035            3,330               (9%)                     6,006             6,536               (8%)

Add:

Depreciation and amortization        2,301            2,300                                        4,605             4,600
Adjustments related to capital
reimbursement activity                 (10)             (10)                                         (19)              (19)
(Gain) loss on asset sales, net          8                -                                          (54)                -
Long-lived asset impairment             (8)               -                                          130                 -
Segment adjusted EBITDA           $  5,868          $ 4,888                20%             $      11,469          $ 10,208                12%


________
*Not considered meaningful
Three and six months ended June 30, 2021. Segment adjusted EBITDA increased
$1.0 million and $1.3 million, respectively, compared to the three and six
months ended June 30, 2020, as a result of higher volume throughput discussed
above together with lower operating expenses associated with our 2020
Restructuring Plan and other cost-cutting initiatives and lower general
operating expenses.
                                       37

--------------------------------------------------------------------------------

Table of Contents


Corporate and Other Overview for the Three and Six Months Ended June 30, 2021
and 2020
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,
natural gas and crude oil marketing services, construction management fees
related to the Double E Project, transaction costs and interest expense.
                                                                                        Corporate and Other
                                          Three Months Ended June 30,                                     Six Months Ended June 30,
                                                                                  Percentage                                                     Percentage
                                            2021                 2020               Change                  2021                2020               Change
                                                       (Dollars in thousands)                                          (Dollars in thousands)
Revenues:
Total revenues                        $          928          $    644                44%             $       1,572          $  1,287                22%
Costs and expenses:
General and administrative (1)                26,850            11,099               142%                    35,957            26,103                38%
Transaction costs                                450             1,207                 *                        217             1,218                 *
Interest expense                              15,502            21,990               (30)%                   29,455            45,818               (36)%
Gain on early extinguishment of debt               -           (54,235)                *                          -           (54,235)                *


________
* Not considered meaningful
(1)Inclusive of a $19.3 million incremental loss contingency accrual during the
three months ended June 30, 2021 related to the 2015 Blacktail Release (See Note
13 - Commitments and Contingencies for additional information).

Total Revenues. Total revenues attributable to Corporate and Other was primarily
due to construction management fee revenue associated with the Double E Project.
General and Administrative. General and administrative expense increased $15.8
million and $9.9 million, respectively, compared to the three and six months
ended June 30, 2020, primarily as a result of a $19.3 million loss contingency
accrual related to the 2015 Blacktail Release (see Note 13 - Commitments and
Contingencies for additional information), partially offset by increased
restructuring and deal costs in the comparative prior year period, as well as a
decrease in salaries and benefits associated with lower headcount from our 2020
Restructuring Plan and other cost-cutting initiatives.
Interest Expense. The decrease in interest expense for the three and six months
ended June 30, 2021, compared to the three and six months ended June 30, 2020,
was primarily due to lower outstanding debt balances associated with the
Partnership's liability management initiatives completed during 2020 which
included (i) open market repurchases of its Senior Notes totaling $234.2 million
face value, (ii) cash tender offers of its Senior Notes totaling $72.2 million,
and (iii) the TL Restructuring that eliminated the Partnership's $155.2 million
SMPH Term Loan. The decrease in interest expense was partially offset by a
higher outstanding balance and a higher interest rate on the Partnership's
Revolving Credit Facility.
Liquidity and Capital Resources
COVID-19 Impact. We are closely monitoring the continuing impact of the outbreak
of COVID-19 on all aspects of our business, including how it will impact our
liquidity and capital resources. Considering the current commodity price
backdrop and COVID-19 pandemic, we have collaborated extensively with our
customer base over the past year. Given continued volatility in market
conditions since March 2020, and based on recently updated production forecasts
and revised development plans from our customers, we currently expect our
results to continue to be affected by decreased drilling activity, the deferral
of well completions from customers and, on a limited scale, temporary production
curtailments predominantly in the Williston Basin, DJ Basin and Utica Shale
reportable segments. We expect 2021 total capital expenditures to range from
$20.0 million to $35.0 million.
As we cannot predict the duration or scope of the COVID-19 pandemic and its
impact on our customers and suppliers, the potential negative financial impact
to our results cannot be reasonably estimated but could be material.
Indebtedness Compliance. We are currently in compliance with all covenants
contained in the Revolving Credit Facility, the Permian Transmission Credit
Facility and the Senior Notes. Our total leverage ratio and first lien leverage
ratio (as defined in the Revolving Credit Agreement) were 5.0 to 1.0 and 3.0 to
1.0, respectively, relative to maximum threshold limits of 5.75 to 1.0 and 3.5
to 1.0, for the trailing 12-month period ended June 30, 2021. Given further
deterioration of market conditions,
                                       38
--------------------------------------------------------------------------------
  Table of Contents
decreased drilling activity, the deferral of well completions from customers,
limitations on our ability to access the capital markets at a competitive cost
to fund our capital expenditures and, on a limited scale, temporary production
curtailments, we could have total leverage and first lien leverage ratios in the
future that are higher than the levels prescribed in the applicable indebtedness
agreements. Adverse developments in our areas of operation could materially
adversely impact our financial condition, results of operations and cash flows.
The 2022 maturity date for our Revolving Credit Facility resulted in the
inclusion of this outstanding indebtedness balance into our going concern
assessment for the quarterly period ended June 30, 2021. As a result, the lack
of sufficient available liquidity to satisfy amounts due under our Revolving
Credit Facility has raised substantial doubt about our ability to continue as a
going concern. We are in the process of negotiating a new 4.5-year asset-based
revolving credit facility (the "ABL Revolver") that is expected to (i) have a
borrowing capacity of $400.0 million to $500.0 million and (ii) be conditioned
on the successful completion of a $700.0 million to $750.0 million offering of
high yield notes (the "High Yield Notes Offering"). It is our goal to consummate
both financings concurrently during the quarter ending September 30, 2021. The
proceeds of the ABL Revolver and the High Yield Notes Offering would be used to
repay the Revolving Credit Facility and redeem the senior unsecured notes due
August 15, 2022 (the "2022 Senior Notes) issued by Summit Holdings and Finance
Corp., another of our wholly-owned subsidiaries. However, there can be no
assurance that we will be able to arrange an ABL Revolver or consummate the High
Yield Notes Offering on terms acceptable to us prior to September 30, 2021 or at
all.
If we are unable to meet our debt service and principal repayment obligations,
or if we fail to comply with the leverage ratios in the documents governing our
debt, we would be in default under the terms of the agreements governing our
debt, which would allow our creditors under those agreements to declare all
outstanding indebtedness thereunder to become immediately due and payable (which
would in turn trigger cross-acceleration or cross-default rights among our debt
agreements). The lenders under our Revolving Credit Facility could also
terminate their commitments to extend credit, the lenders could foreclose
against our assets securing their borrowings and we could be forced into
bankruptcy or liquidation. If the amounts outstanding under our Revolving Credit
Facility or our Senior Notes were to be accelerated, we cannot assure you that
our assets would be sufficient to repay in full the amounts owed to our
creditors. For additional information, see the risk factor titled "We may not be
able to generate sufficient cash to service all of our indebtedness and may be
forced to take other actions to satisfy our obligations under our indebtedness
or to refinance, which may not be successful." included in Part II. Item 1A.
Risk Factors in this report.
Credit Arrangements and Financing Activities
Revolving Credit Facility. We have a $1.1 billion senior secured Revolving
Credit Facility that matures on May 13, 2022. As of June 30, 2021, the
outstanding balance of the Revolving Credit Facility was $762.0 million and the
unused portion totaled $314.9 million, after giving effect to the issuance
thereunder of $23.1 million of outstanding but undrawn irrevocable standby
letters of credit. Based on covenant limits, our available borrowing capacity
under the Revolving Credit Facility, as of June 30, 2021, was approximately
$137.6 million. There were no defaults or events of default during the three
months ended June 30, 2021, and, as of June 30, 2021, we were in compliance with
the financial covenants in the Revolving Credit Facility.
Permian Transmission Credit Facility. On March 8, 2021, we entered into the
Permian Transmission Credit Facility which allows for $175.0 million of senior
secured credit facilities, including a $160.0 million term loan facility and a
$15.0 million working capital facility. As of June 30, 2021, the outstanding
balance of the Permian Transmission Credit Facility was $53.5 million, and the
unused portion totaled $121.5 million. Our available borrowing capacity under
the Permian Transmission Credit Facility as of June 30, 2021 was approximately
$119.5 million. There were no defaults or events of default during the three
months ended June 30, 2021, and, as of June 30, 2021, we were in compliance with
the financial covenants in the Permian Transmission Credit Facility.
Exchange Offer. In April 2021, we completed an offer to exchange 18,662 Series A
Preferred Units for 538,715 newly issued SMLP common units, which is net of
units withheld for withholding taxes.
We may in the future use a combination of cash, secured or unsecured borrowings
and issuances of our common units or other securities and the proceeds from
asset sales to retire or refinance our outstanding debt or Series A Preferred
Units through privately negotiated transactions, open market repurchases,
redemptions, exchange offers, tender offers or otherwise, but we are under no
obligation to do so.
For additional information on our long-term debt, see Note 9. Partners' Capital
and Mezzanine Capital.
LIBOR Transition
LIBOR is the basic rate of interest widely used as a reference for setting the
interest rates on loans globally. In 2017, the United Kingdom's Financial
Conduct Authority, which regulates LIBOR, announced that it intends to phase out
LIBOR by the end of 2021. The U.S. Federal Reserve, in conjunction with the
Alternative Reference Rates Committee, a steering committee comprised of large
U.S. financial institutions, is considering replacing U.S. dollar LIBOR with a
new index, the Secured Overnight Financing Rate ("SOFR"), calculated using
short-term repurchase agreements backed by Treasury securities. We are
                                       39
--------------------------------------------------------------------------------
  Table of Contents
evaluating the potential impact of the eventual replacement of the LIBOR
benchmark interest rate, however, we are not able to predict whether LIBOR will
cease to be available after 2021, whether SOFR will become a widely accepted
benchmark in place of LIBOR, or what the impact of such a possible transition to
SOFR may be on our business, financial condition and results of operations.
We will need to renegotiate our Revolving Credit Facility to determine the
interest rate to replace LIBOR with the new standard that is established,
assuming that it is not refinanced. The potential effect of any such event on
interest expense cannot yet be determined.
Cash Flows
The components of the net change in cash and cash equivalents were as follows:
                                                                       Six Months Ended June 30,
                                                                        2021                 2020
                                                                            (In thousands)
Net cash provided by operating activities                         $      86,217          $ 105,371
Net cash used in investing activities                                   (46,905)          (106,937)
Net cash provided by (used in) financing activities                     (47,331)             6,263

Net change in cash, cash equivalents and restricted cash $ (8,019) $ 4,697



Operating activities.
Cash flows provided by operating activities for the six months ended June 30,
2021 primarily reflected:
•net loss of $10.8 million plus adjustments of $90.5 million for non-cash items;
and
•$6.4 million increase in working capital accounts.
Cash flows provided by operating activities for the six months ended June 30,
2020 primarily reflected:
•a $7.0 million increase in accounts receivable related to the timing of
invoicing and cash collections;
•a $2.9 million increase in accounts payable due to the timing of payment
obligations;
•a $3.5 million increase in deferred revenue for cash receipts not yet
recognized as revenue;
•a $11.8 million decrease in accrued expenses primarily due to the timing of
accrued payment obligations; and
•other changes in working capital
Investing activities.
Cash flows used in investing activities during the six months ended June 30,
2021 primarily reflected:
•$48.9 million for investments in the Double E joint venture relating to the
Double E Project;
•$6.0 million cash outflow for capital expenditures;
•offset by an $8.0 million cash inflow from proceeds for the sale of compressor
equipment;
Cash flows used in investing activities during the six months ended June 30,
2020 primarily reflected:
•$79.7 million for investments in the Double E joint venture relating to the
Double E Project; and
•$27.4 million of capital expenditures primarily attributable to the DJ Basin of
$8.4 million, the Williston Basin of $7.4 million and Summit Permian of
$4.9 million.
Financing activities.
Cash flows used in financing activities during the six months ended June 30,
2021 primarily reflected:
•$95.0 million of cash outflow for repayments on the Revolving Credit Facility;
•$5.2 million of cash payments related to debt issuance costs; and
•partially offset by $53.5 million from borrowings under the Permian
Transmission Credit Facility.
Cash flows used in financing activities during the six months ended June 30,
2020 primarily reflected:
•$56.0 million of net borrowings under our Revolving Credit Facility;
                                       40
--------------------------------------------------------------------------------
  Table of Contents
•$48.7 million of net proceeds from the issuance of Subsidiary Series A
Preferred Units;
•$35.0 million of net borrowings under ECP Loans;
•$76.7 million repurchase of Senior Notes;
•$41.8 million to purchase common units in the GP Buy-In Transaction; and
•$6.0 million of distributions to noncontrolling interest SMLP unitholders.
Contractual Obligations Update
We are leading the development, permitting and construction of the Double E
Project and will operate the pipeline upon its commissioning. At our current 70%
interest, we estimate that our share of the capital expenditures required to
develop the Double E Project will total approximately $300.0 million. Assuming
timely receipt of the required regulatory approvals and no material delays in
construction, we expect that the Double E Project will be placed into service in
the fourth quarter of 2021. On March 8, 2021, we entered into the Permian
Transmission Credit Facility to finance the vast majority of our remaining
capital calls associated with the Double E Project, debt services and other
general corporate purposes.
On August 4, 2021, the Partnership and several of its subsidiaries entered into
the Global Settlement to resolve the legal matters resulting from the 2015
Blacktail Release. As a result, the Partnership increased its loss contingency
for the 2015 Blacktail Release during the quarterly reporting period ending June
30, 2021 by $19.3 million, resulting in an accrued loss liability for this
matter at June 30, 2021 of $36.3 million. Key financial terms of the Global
Settlement include payment of penalties and fines totaling $36.3 million over
six years, with interest applied to unpaid amounts and $3.1 million owed within
the next twelve months. Between 2021 and 2027, the Partnership expects to make
payments of principal and interest of $3.1 million, $5.4 million, $7.2 million,
$7.1 million, $7.0 million, $6.8 million, and $1.7 million, respectively, in
connection with the penalties and fines included in the Global Settlement. We
believe that the Global Settlement will have minimal impact on the Partnership's
strategic plans or day-to-day operations due to the ability to pay fines and
penalties over multiple years and expected manageable size of installments. See
Part II. Item 1. "Legal Proceedings" in this report for additional information.
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 requires 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.
For the six months ended June 30, 2021, cash paid for capital expenditures
totaled $6.0 million which included $2.1 million of maintenance capital
expenditures. For the six months ended June 30, 2021, there were no
contributions to Ohio Gathering and we contributed $48.9 million to Double E
(see Note 5 - Equity Method Investments). We expect 2021 total capital
expenditures to range from $20.0 million to $35.0 million.
We rely primarily on internally generated cash flow 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 Revolving
Credit Facility and Permian Transmission Credit Facility, together with
internally generated cash flow 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. Our Revolving Credit Facility became current
on May 13, 2021. We are in the process of negotiating the ABL Revolver that will
be conditioned on the High Yield Notes Offering. It is our goal to consummate
both financings concurrently during the quarter ending September 30, 2021. The
proceeds of the ABL Revolver and the High Yield Notes Offering would be used to
repay the Revolving Credit Facility and redeem the 2022 Senior Notes. However,
there can be no assurance that we will be able to arrange an ABL Revolver or
consummate the High Yield Notes Offering on terms acceptable to us prior to
September 30, 2021 or at all.
Considering the current commodity price backdrop and continued uncertainty
regarding impacts from the COVID-19 pandemic, we will remain disciplined with
respect to future capital expenditures, which will be primarily concentrated on
accretive bolt-on opportunities of our existing systems in our Core Focus Areas.
                                       41
--------------------------------------------------------------------------------
  Table of Contents
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
new commercial agreements with third parties and (ii) prevailing conditions and
outlook in the natural gas, crude oil and NGLs and markets.
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 six months ended June 30, 2021, there were no material changes to the
off-balance sheet obligations disclosed in our 2020 Annual Report other than the
existence of a wholly owned marketing subsidiary's ten-year firm transportation
agreement with Double E, an equity method investment of the Partnership, that
will be utilized to advantageously market natural gas for the Partnership and
its customers in and around our assets in the Permian Basin. The agreement
becomes effective upon the in-service date of the Double E Project and requires
the Partnership to pay Double E on average $3.1 million per year, over the next
ten years, for access to firm transportation on the Double E Project pipeline.
Summarized Financial Information
The supplemental summarized financial information below reflects SMLP's separate
accounts, the combined accounts of the Summit Holdings and Finance Corp.
(together, the "Co-Issuers") and its guarantor subsidiaries (the "Guarantor
Subsidiaries" and together with the Co-Issuers, the "Obligor Group") for the
dates and periods indicated. The financial information of the Obligor Group is
presented on a combined basis and intercompany balances and transactions between
the Co-Issuers and Guarantor Subsidiaries have been eliminated. There were no
reportable transactions between the Co-Issuers and Obligor Group and the
subsidiaries that were not issuers or guarantors of the Senior Notes.
Payments to holders of the Senior Notes are affected by the composition of and
relationships among the Co-Issuers, the Guarantor Subsidiaries and Permian
Holdco and Summit Permian Transmission, both of which are unrestricted
subsidiaries of SMLP and are not issuers or guarantors of the Senior Notes. The
assets of our unrestricted subsidiaries are not available to satisfy the demands
of the holders of the Senior Notes. In addition, our unrestricted subsidiaries
are subject to certain contractual restrictions related to the payment of
dividends, and other rights in favor of their non-affiliated stakeholders, that
limit their ability to satisfy the demands of the holders of the Senior Notes.
A list of each of SMLP's subsidiaries that is a guarantor, issuer or co-issuer
of our registered securities subject to the reporting requirements in Release
33-10762 is filed as Exhibit 22.1 to this report.
Summarized Balance Sheet Information. Summarized balance sheet information as of
June 30, 2021 and December 31, 2020 follow.
                                       42

--------------------------------------------------------------------------------

  Table of Contents
                                  June 30, 2021
                             SMLP        Obligor Group
                                  (In thousands)
Assets
Current assets            $  3,156      $       74,542
Noncurrent assets            5,561           2,207,593

Liabilities
Current liabilities       $ 26,491      $      814,684
Noncurrent liabilities      35,537             538,339


                                 December 31, 2020
                             SMLP         Obligor Group
                                  (In thousands)
Assets
Current assets            $   2,265      $       78,304
Noncurrent assets             6,952           2,277,807

Liabilities
Current liabilities       $  13,339      $       50,192
Noncurrent liabilities       19,987           1,398,872


Summarized Statements of Operations Information. For the purposes of the
following summarized statements of operations, we allocate a portion of general
and administrative expenses recognized at the SMLP parent to the Obligor Group
to reflect what those entities' results would have been had they operated on a
stand-alone basis. Summarized statements of operations for the three months
ended June 30, 2021 and for the year ended December 31, 2020 follow.
                                                                    Six Months Ended June 30, 2021
                                                                     SMLP               Obligor Group
                                                                            (In thousands)
Total revenues                                                  $          -          $      199,359
Total costs and expenses                                              20,669                 149,152
Income (loss) before income taxes and income from
equity method investees                                              (34,298)                 21,213
Income from equity method investees                             $          -          $        5,765
Net income (loss)                                                    (34,036)                 26,978


                                                                       Year Ended December 31, 2020
                                                                       SMLP                Obligor Group
                                                                              (In thousands)
Total revenues                                                  $             -          $      383,473
Total costs and expenses                                                 26,169                 302,989
Income (loss) before income taxes and loss from
equity method investees                                                 (26,000)                122,108
Income from equity method investees                                           -                  13,073
Net income (loss)                                               $       

(26,016) $ 135,181



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 changes to our significant accounting
policies since December 31, 2020.
                                       43
--------------------------------------------------------------------------------
  Table of Contents
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 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 decision whether to pay, or our ability to grow, our cash distributions;
•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 efforts, as well as the
quantity of natural gas, crude oil and produced water volumes produced within
proximity of our assets;
•the current and potential future impact of the COVID-19 pandemic on our
business, results of operations, financial position or cash flows;
•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;
•our ability to refinance near-term maturities on favorable terms or at all and
the related impact on our ability to continue as a going concern;
•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;
•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 (as defined herein), which is still subject to court approval;
•weather conditions and terrain in certain areas in which we operate;
                                       44
--------------------------------------------------------------------------------
  Table of Contents
•any other issues that can result in deficiencies in the design, installation or
operation of our gathering, compression, treating and processing 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;
•changes in tax status;
•the effects of litigation;
•changes in general economic conditions; and
•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 units, preferred units and senior 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.
                                       45

--------------------------------------------------------------------------------

Table of Contents

© Edgar Online, source Glimpses

All news about SUMMIT MIDSTREAM PARTNERS, LP
10/13Energy Stocks Slip Premarket Wednesday
MT
10/13SUMMIT MIDSTREAM PARTNERS LP : Energy
MT
10/13SUMMIT MIDSTREAM PARTNERS LP : Units Launch $700 Million Debt Offering
MT
10/13SUMMIT MIDSTREAM PARTNERS LP : Announces Private Offering of $700 Million Senior Secured S..
PU
10/13SUMMIT MIDSTREAM PARTNERS, LP : Other Events, Financial Statements and Exhibits (form 8-K)
AQ
10/13SUMMIT MIDSTREAM PARTNERS, LP : Announces Private Offering of $700 Million Senior Secured ..
PR
10/13Summit Midstream Partners, LP Announces Private Offering of $700 Million Senior Secured..
CI
08/09SUMMIT MIDSTREAM PARTNERS LP : Reports Second Quarter 2021 Financial and Operating Results
AQ
08/09SUMMIT MIDSTREAM PARTNERS LP : Management's Discussion and Analysis of Financial Condition..
AQ
08/06Summit Midstream Resolves Investigations of North Dakota Water Spill
DJ
More news
Analyst Recommendations on SUMMIT MIDSTREAM PARTNERS, LP
More recommendations