Summit Midstream Partners (SMLP) Reports Q4 Revenues Results In-Line

Summit Midstream Partners (NYSE: SMLP) reported Q4 revenue for the quarter came in at $112.25 million versus the consensus estimate of $112.23 million.

Heath Deneke, President and Chief Executive Officer, commented, "SMLP has taken a number of actions since the fourth quarter of 2019 to prepare for a challenging macro environment in 2020. In general, we expect a reduction in our customers' 2020 drilling and completion activities compared to 2019 as a result of a weakening commodity price backdrop, together with more limited access to capital in the upstream sector. Our 2020 adjusted EBITDA guidance of $260 million to $285 million is based on current plans from our customers, with the lower end of guidance incorporating a substantial amount of risking to each customer's development timelines and production forecasts, which we believe reflects the current market backdrop. If our customers perform consistently with the recent forecasts that they have provided, we will be positioned to achieve the high end of our guidance range. We expect 2020 total capital expenditures of $50 million to $70 million, including maintenance capex and approximately $10 million related to our equity method investment in Double E."

"We made significant progress on a number of major initiatives since the fourth quarter that were designed to mitigate the negative impact of further industry weakness in 2020, strengthen the balance sheet, increase our financial flexibility, and right-size our cost structure. These initiatives included:

• Our partial payment of the DPPO in the amount of $122.75 million, and extension of the DPPO payment from 2020 to 2022,
• Our announcement to shift the next $80 million of Double E capital investments to a third-party investor at a 7% annualized distribution rate, while retaining long-term upside from the project,
• Our recent announcement to reduce our quarterly distribution by 56.5% to $0.125 per unit, which will enable us to incrementally retain over $60 million of annualized cash flow that will be used to accelerate de-leveraging,
• Our continued commitment to reducing costs across our organization and enhancing operating margins, which we expect will result in at least $10 million of expense savings in 2020, and will enable up to $20 million of annual run rate expense savings thereafter, and
• Our enhanced capital discipline, and a higher return threshold for incremental capital investments, as represented by the significant reductions in total capital expenditures, which we now expect to be less than $70 million for 2020."

"We believe that the above actions will enable SMLP to generate sufficient cash in 2020 to pay down approximately $50 million of outstanding debt, excluding the impact of any future potential asset sales. We continue to actively evaluate potential divestitures and joint ventures of certain of our assets, and will continue to do so in a patient and disciplined manner. Our expectation is that any divestiture will serve to accelerate de-leveraging of SMLP's balance sheet."

"We reported adjusted EBITDA in the fourth quarter of 2019 totaling $77.5 million, which was a quarterly record for SMLP, but slightly below our expectations, primarily due to deferred well connections in the quarter and faster than expected declines from new wells, primarily behind our Utica Shale and Ohio Gathering systems. Fourth quarter results reflected higher sequential adjusted EBITDA across five of our eight reportable segments as a result of higher volumes and expense reductions that we began to realize in the quarter. The Williston Basin segment generated exceptionally strong results for the quarter, including a 12.6% sequential quarterly increase in volume throughput to a record 118.5 Mbbl/d, and a $6.4 million sequential quarterly increase in segment adjusted EBITDA."

For earnings history and earnings-related data on Summit Midstream Partners (SMLP) click here.

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