HOUSTON - Summit Midstream Partners, LP (NYSE: SMLP) ('Summit', 'SMLP' or the 'Partnership') announced today its financial and operating results for the three months ended June 30, 2021, including a net loss of $19.7 million, adjusted EBITDA of $62.1 million and DCF of $46.5 million.
Net loss for the quarter included $31.5 million of non-cash charges including (i) a $19.3 million loss contingency accrual related to a previously disclosed incident dating back to a 2015 release of produced water from a pipeline owned by Meadowlark Midstream and (ii) an $12.2 million accrual related to Energy Capital Partners' full exercise of equity warrants in exchange for 414,477 SMLP common units. Operated natural gas volume throughput averaged 1,441 million cubic feet per day ('MMcf/d') and liquids volume throughput averaged 63 thousand barrels per day ('Mbbl/d'). Operated natural gas volumes increased 7.1% relative to the first quarter of 2021, largely due to continued strong performance from the four Utica Shale wells connected in the first quarter of 2021 and 20 new wells that were turned-in-line during the second quarter of 2021 across the Utica Shale, Williston Basin and Marcellus Shale segments. Quarterly liquids volume throughput decreased by 3.1% relative to the first quarter of 2021, primarily as a result of natural production declines.
Heath Deneke, President, Chief Executive Officer and Chairman, commented, 'Summit's second quarter financial and operational results far exceeded our original expectations set in March, and adjusted EBITDA of $62.1 million was in line with our recently increased full year 2021 adjusted EBITDA guidance range of $225 million to $240 million. Our quarterly results were driven largely by our continued focus on operational excellence and proactive cost management efforts, together with robust performance from well connections to date. We are encouraged by the substantially improved commodity price backdrop and we continue to see signs of increasing customer activity around our footprint as we look ahead to 2022, particularly in our Permian, Williston and Utica segments. We remain optimistic that this positive momentum will continue to build through the end of the year and into 2022.'
'We are making excellent progress towards achieving our holistic refinancing plans of our 2022 debt maturities, which is expected to include a new $400 to $500 million asset-based revolver and a new high yield notes offering of $700 to $750 million. To date, we have received $400 million of ABL Revolver commitments from existing lenders and new lenders, conditioned on the successful arrangement of a new high yield notes offering that we expect to launch during the third quarter of 2021. When completed, the ABL Revolver and new high yield notes will provide a comprehensive financing solution for Summit with enhanced financial flexibility, sufficient liquidity to grow the business and a multi-year runway to continue harvesting substantial free cash flow to further de-lever the balance sheet and drive significant unitholder value going forward. Completing this refinancing plan is the top priority for our team and we are excited about closing this comprehensive financing solution and removing an overhang that has negatively impacted our stakeholders for quite some time.'
'We also continue to make excellent progress with construction of the Double E Pipeline while maintaining a premier project safety and compliance record. With construction now approximately 60% complete, we are ahead of schedule and we are well on track to place the project in-service during the fourth quarter of 2021. Additionally, we continue to expect to deliver the project below the $425 million revised budget with approximately $30 million of uncommitted contingency remaining in the budget.'
'Additionally, we recently announced that we have entered into agreements with the government to resolve investigations into the previously disclosed discovery in January 2015 of a produced water spill into Blacktail Creek, near Marmon, North Dakota (the 'Blacktail Release'). The spill occurred on a produced water gathering system owned by Meadowlark Midstream, which has been a subsidiary of SMLP since 2016. We have been working to resolve this matter since 2015 and I'm pleased that we have reached a satisfactory settlement resolution for all parties. As part of the settlement, SMLP has agreed to pay an aggregate amount of $36.3 million, which has been fully accrued, and which will be paid over a period of six years to the state of North Dakota and the federal government. A portion of the settlement proceeds will provide funding for supplemental environmental projects in the region. The settlement remains subject to court approval to become effective.'
'Safety and the environment are of the utmost importance to Summit, our board and all of our employees. Since the Marmon spill, SMLP has invested approximately $75 million in related environmental remediation efforts as well as made improvements to our operating systems and our company-wide processes and procedures that we believe are leading edge among industry pipeline management best practices.'
2022 Maturities - Refinancing Update
Over the last several months, Summit has initiated a comprehensive plan to refinance its existing $1.1 billion revolving credit facility, due May 2022 (the 'Revolver') and 5.50% senior unsecured notes due 2022 (the '2022 Notes' and together with the Revolver, the '2022 Maturities'). As of today, the 2022 Maturities have an aggregate outstanding principal balance of approximately $969 million, comprised of approximately $735 million outstanding under the Revolver, net of cash, and approximately $234 million outstanding under the 2022 Notes.
To date, Summit has secured $400 million of commitments from a syndicate of existing and new lenders for a new, 4.5-year, asset-based revolving credit facility, based on the value of Summit's above-ground fixed assets. The closing of the ABL Revolver is conditioned on the successful arrangement of a new $700 million to $750 million high yield notes offering (the 'New HY Notes'), which Summit expects to launch and close before the end of September 2021, and other customary closing conditions. The ABL Revolver and the New HY Notes will be scheduled to close concurrently in the third quarter of 2021, and collectively, the proceeds will be used to refinance the 2022 Maturities.
About Summit Midstream Partners, LP
SMLP is a value-oriented limited partnership focused on developing, owning and operating midstream energy infrastructure assets that are strategically located in the core producing areas of unconventional resource basins, primarily shale formations, in the continental United States. SMLP provides natural gas, crude oil and produced water gathering, processing and transportation services pursuant to primarily long-term, fee-based agreements with customers and counterparties in six unconventional resource basins: (i) the Appalachian Basin, which includes the Utica and Marcellus shale formations in Ohio and West Virginia; (ii) the Williston Basin, which includes the Bakken and Three Forks shale formations in North Dakota; (iii) the Denver-Julesburg Basin, which includes the Niobrara and Codell shale formations in Colorado and Wyoming; (iv) the Permian Basin, which includes the Bone Spring and Wolfcamp formations in New Mexico; (v) the Fort Worth Basin, which includes the Barnett Shale formation in Texas and (vi) the Piceance Basin, which includes the Mesaverde formation as well as the Mancos and Niobrara shale formations in Colorado. SMLP has an equity investment in Double E Pipeline, LLC, which is developing natural gas transmission infrastructure that will provide transportation service from multiple receipt points in the Delaware Basin to various delivery points in and around the Waha Hub in Texas. SMLP also has an equity investment in Ohio Gathering, which operates extensive natural gas gathering and condensate stabilization infrastructure in the Utica Shale in Ohio. SMLP is headquartered in Houston, Texas.
This press release includes certain statements concerning expectations for the future that are forward-looking within the meaning of the federal securities laws. 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 and possible actions taken by us or our subsidiaries are also forward-looking statements.
Forward-looking statements also contain known and unknown risks and uncertainties (many of which are difficult to predict and beyond management's control) that may cause SMLP's actual results in future periods to differ materially from anticipated or projected results. An extensive list of specific material risks and uncertainties affecting SMLP is contained in its 2020 Annual Report on Form 10-K filed with the Securities and Exchange Commission (the 'SEC') on March 4, 2021, as amended and updated from time to time. Any forward-looking statements in this press release are made as of the date of this press release and SMLP undertakes no obligation to update or revise any forward-looking statements to reflect new information or events.