THE WOODLANDS, Texas,
Feb. 26, 2015 /PRNewswire/ -- Summit
Midstream Partners, LP (NYSE: SMLP) announced today its financial
and operating results for the three months and year ended
December 31, 2014. SMLP
reported adjusted EBITDA of $48.9
million and adjusted distributable cash flow of $35.1 million for the fourth quarter of 2014
compared to $46.9 million and
$35.2 million, respectively, for the
fourth quarter of 2013. SMLP reported a net loss of
$37.7 million for the fourth quarter
of 2014 compared to net income of $21.0
million in the fourth quarter of 2013. Volume throughput
averaged 1,491 MMcf/d in the fourth quarter of 2014 compared to
1,223 MMcf/d in the fourth quarter of 2013, an increase of 21.9%,
primarily due to increased throughput on the Mountaineer Midstream,
Bison Midstream and DFW Midstream systems.
For the year ended December 31,
2014, SMLP reported adjusted EBITDA of $193.8 million and adjusted distributable cash
flow of $140.7 million compared to
$164.8 million and $131.0 million, respectively, for the year ended
December 31, 2013. SMLP
reported a net loss of $21.2 million
for the year ended December 31, 2014
compared to net income of $53.3
million for the year ended December
31, 2013. Volume throughput averaged 1,418 MMcf/d for
the year ended December 31, 2014, an
increase of 24.6% over 2013.
Steve Newby, President and Chief
Executive Officer of SMLP commented, "SMLP reported strong fourth
quarter operating performance reflecting higher year-over-year and
sequential quarterly volume throughput across our Marcellus Shale,
Williston Basin, and Barnett Shale
segments. Our fourth quarter 2014 adjusted distributable cash
flow was impacted by the sharp deterioration of commodity prices
late in the quarter. Despite these challenges, SMLP delivered
its ninth consecutive quarterly distribution increase to
unitholders, growing the 2014 fourth quarter distribution per
limited partner unit by 16.7% over the fourth quarter of 2013."
"As we look forward, we continue to monitor the impact of lower
crude oil, NGL and natural gas prices on our customers' capital
expenditure budgets and ultimately, on our volumes and cash
flows. SMLP's primarily fee-based contract portfolio includes
a high level of contracted and growing MVCs that limit our direct
commodity price exposure. Based upon 2015 pricing of
$55.00 per barrel crude oil and
$2.75 per MMBtu natural gas, coupled
with an expected decrease in our customers' 2015 capital
expenditure budgets, we are lowering the midpoint of our previously
announced 2015 adjusted EBITDA guidance by 9.0%. This revision is
driven by the approximately 30% to 50% decrease in commodity prices
since announcing our 2015 financial guidance in early November 2014."
"Our strong balance sheet and large inventory of potential drop
down assets at Summit Investments provides us with visible and
attractive distribution growth in 2015 and over the long
term. We remain committed to our strategy to acquire assets
from Summit Investments, at a rate of $400
million to $800 million annually through 2017, which will
drive our long-term distribution growth."
SMLP's financial results for the fourth quarter and full year of
2014 were impacted by several charges in the fourth quarter of 2014
including:
- a $54.2 million noncash goodwill
impairment related to the Bison Midstream system;
- a $5.5 million noncash long-lived
asset impairment associated with a DFW Midstream compressor station
project that was terminated and replaced with a pipeline looping
project.
Marcellus Shale Segment
The Mountaineer Midstream
gathering system provides SMLP's midstream services for the
Marcellus Shale reportable segment. Segment adjusted EBITDA
totaled $4.3 million for the fourth
quarter of 2014, up 28.0% over the comparable period in 2013
primarily due to higher volume throughput across the Mountaineer
Midstream system. Volume throughput on the Mountaineer
Midstream system averaged 459 MMcf/d in the fourth quarter of 2014,
up 133.0% over the fourth quarter of 2013, and up 10.3% over the
third quarter of 2014. Volumes continued to increase during
the fourth quarter of 2014 as Antero Resources Corp. ("Antero")
continued to actively drill and connect new wells upstream of the
Mountaineer Midstream system and as new compressor stations were
commissioned by third parties.
Williston Basin
Segment
The Bison Midstream gathering system provides SMLP's
midstream services for the Williston Basin reportable segment.
Segment adjusted EBITDA totaled $5.8
million for the fourth quarter of 2014, up 29.3% over the
comparable period in 2013 primarily due to higher volume throughput
across the Bison Midstream system, partially offset by lower
commodity prices. Volume throughput on the Bison Midstream
system averaged 22 MMcf/d in the fourth quarter of 2014, up 57.1%
over the fourth quarter of 2013, and up 4.8% over the third quarter
of 2014. Volume growth resulted primarily from the connection
of new wells and the utilization of newly installed compression
capacity. Declining crude oil, NGL and natural gas prices
negatively impacted the margins associated with Bison Midstream's
percent-of-proceeds contracts during the fourth quarter of
2014.
SMLP acquired the Bison Midstream system from Summit Investments
in June 2013 for $248.9 million. Because Bison Midstream was owned
by Summit Investments, it was considered an entity under common
control. Upon closing the Bison Drop Down in June 2013, SMLP recognized net assets of
$303.2 million, the amount of Summit
Investments' historical cost, which included $54.2 million of goodwill. In connection
with the sharp decline in commodity prices since the fourth quarter
of 2014, SMLP reassessed the carrying value of the Bison Midstream
system, including goodwill, and compared that to its fair value,
including goodwill. As a result of this evaluation, SMLP
recognized a $54.2 million noncash
goodwill impairment.
Barnett Shale Segment
The DFW Midstream gathering
system provides SMLP's midstream services for the Barnett Shale
reportable segment. Segment adjusted EBITDA totaled
$14.9 million for the fourth quarter
of 2014, down 7.7% over the comparable period in 2013 primarily due
to $1.0 million of lower fuel
retainage revenue associated with the settlement of a system
imbalance in 2014. Volume throughput on the DFW Midstream
system averaged 372 MMcf/d in the fourth quarter of 2014, which was
flat relative to the fourth quarter of 2013, and up 3.0% over the
third quarter of 2014. Volume throughput was driven primarily
by the contribution from the Lonestar assets which were acquired on
September 30, 2014. In
addition, during December 2014,
customer production recommenced from several pad sites which had
been temporarily shut-in for drilling and completion activities
during most of 2014. Fourth quarter 2014 volume throughput
growth was partially offset by a planned, two-day shut-down of DFW
Midstream's compressor stations for annual regulatory
testing.
Piceance Basin Segment
The Legacy Grand River and Red
Rock Gathering systems provide SMLP's midstream services for the
Piceance Basin reportable segment. Segment adjusted EBITDA
totaled $27.5 million for the fourth
quarter of 2014, up 11.3% over the comparable period in 2013
primarily due to higher volume throughput across the Red Rock
Gathering system, offset by volume throughput declines from the
Legacy Grand River system and direct commodity pricing related to
the sale of condensate. Volume throughput for the Piceance
Basin segment averaged 638 MMcf/d in the fourth quarter of 2014,
down 0.6% from the fourth quarter of 2013 and down 4.3% from the
third quarter of 2014. Volume throughput declines were
primarily a result of Encana's continued suspension of drilling
activities in the Piceance Basin, which has been in effect since
the fourth quarter of 2013. The majority of the gathering
agreements for the Piceance Basin segment include MVCs, which
largely mitigate the financial impact associated with declining
volumes. As a result, the lower volume throughput during the
fourth quarter of 2014 translated primarily into larger MVC
shortfall payments, thereby minimizing the impact on adjusted
EBITDA. In addition, volume growth from Red Rock Gathering's
customers continues to offset volume declines from the Legacy Grand
River system. This shift in volume mix has translated into higher
average gathering rates per Mcf.
|
Three months
ended
December
31,
|
|
|
Year
ended
December
31,
|
|
2014
|
|
|
2013
|
|
|
|
2014
|
|
|
2013
|
|
Average daily
throughput (MMcf/d):
|
|
|
|
|
|
|
|
|
|
|
|
|
Marcellus Shale
(1)
|
459
|
|
|
197
|
|
|
|
382
|
|
|
87
|
|
Williston Basin
(2)
|
22
|
|
|
14
|
|
|
|
18
|
|
|
14
|
|
Barnett
Shale
|
372
|
|
|
370
|
|
|
|
358
|
|
|
391
|
|
Piceance
Basin
|
638
|
|
|
642
|
|
|
|
660
|
|
|
646
|
|
Total average daily
throughput
|
1,491
|
|
|
1,223
|
|
|
|
1,418
|
|
|
1,138
|
|
|
|
(1)
|
Mountaineer Midstream
was acquired by SMLP on June 21, 2013. For the period
beginning with SMLP's ownership through December 31, 2013, average
throughput was 165 MMcf/d.
|
(2)
|
Bison Midstream was
acquired from an affiliate of Summit Investments in June 2013 and
includes results for all periods in which common control existed,
beginning in February 2013. For the period beginning with Summit
Investments' ownership through December 31, 2013, average
throughput was 16 MMcf/d.
|
MVC Shortfall Payments
SMLP billed
its customers $33.9 million of MVC
shortfall payments in the fourth quarter of 2014 because those
customers did not meet their MVCs. Certain of SMLP's natural gas
gathering agreements do not have credit banking mechanisms and as
such, the MVC shortfall payments from these customers are accounted
for as gathering revenue in the period that they are earned.
For the fourth quarter of 2014, SMLP recognized $19.5 million of gathering revenue associated
with MVC shortfall payments from certain customers on the Grand
River and DFW Midstream systems. Of the billings for MVC shortfall
payments, $13.9 million was recorded
as deferred revenue on SMLP's balance sheet because these customers
have the ability to use these MVC shortfall payments to offset
gathering fees related to future throughput in excess of future
period MVCs. MVC shortfall payment adjustments in the fourth
quarter of 2014 totaled ($21.1)
million and included adjustments related to future
anticipated shortfall payments from certain customers on the Grand
River, Bison Midstream and DFW Midstream systems. The net impact of
these mechanisms increased adjusted EBITDA by $12.3 million in the fourth quarter of 2014.
|
Three months ended
December 31, 2014
|
|
MVC
billings
|
|
|
Gathering
revenue
|
|
Adjustments
to
MVC
shortfall
payments
|
|
Net
impact
to adjusted
EBITDA
|
|
(In
thousands)
|
Net change in
deferred revenue:
|
|
|
|
|
|
|
|
|
|
|
|
|
Marcellus
Shale
|
$
|
—
|
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Williston
Basin
|
10,592
|
|
|
|
—
|
|
|
10,592
|
|
|
10,592
|
|
Barnett
Shale
|
—
|
|
|
|
—
|
|
|
(233)
|
|
|
(233)
|
|
Piceance
Basin
|
3,756
|
|
|
|
—
|
|
|
3,514
|
|
|
3,514
|
|
Total net change in
deferred revenue
|
$
|
14,348
|
|
|
|
$
|
—
|
|
|
$
|
13,873
|
|
|
$
|
13,873
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
MVC shortfall
payment adjustments:
|
|
|
|
|
|
|
|
|
|
|
|
|
Marcellus
Shale
|
$
|
—
|
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Williston
Basin
|
—
|
|
|
|
—
|
|
|
(7,918)
|
|
|
(7,918)
|
|
Barnett
Shale
|
367
|
|
|
|
367
|
|
|
457
|
|
|
824
|
|
Piceance
Basin
|
19,139
|
|
|
|
19,139
|
|
|
(13,657)
|
|
|
5,482
|
|
Total MVC shortfall
payment adjustments
|
$
|
19,506
|
|
|
|
$
|
19,506
|
|
|
$
|
(21,118)
|
|
|
$
|
(1,612)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
$
|
33,854
|
|
|
|
$
|
19,506
|
|
|
$
|
(7,245)
|
|
|
$
|
12,261
|
|
|
|
Year ended
December 31, 2014
|
|
MVC
billings
|
|
|
Gathering
revenue
|
|
Adjustments
to
MVC
shortfall
payments
|
|
Net
impact
to adjusted
EBITDA
|
|
(In
thousands)
|
Net change in
deferred revenue:
|
|
|
|
|
|
|
|
|
|
|
|
|
Marcellus
Shale
|
$
|
—
|
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Williston
Basin
|
10,743
|
|
|
|
—
|
|
|
10,743
|
|
|
10,743
|
|
Barnett
Shale
|
2,609
|
|
|
|
1,525
|
|
|
821
|
|
|
2,346
|
|
Piceance
Basin
|
14,813
|
|
|
|
—
|
|
|
14,813
|
|
|
14,813
|
|
Total net change in
deferred revenue
|
$
|
28,165
|
|
|
|
$
|
1,525
|
|
|
$
|
26,377
|
|
|
$
|
27,902
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
MVC shortfall
payment adjustments:
|
|
|
|
|
|
|
|
|
|
|
|
|
Marcellus
Shale
|
$
|
1,742
|
|
|
|
$
|
1,742
|
|
|
$
|
—
|
|
|
$
|
1,742
|
|
Williston
Basin
|
—
|
|
|
|
—
|
|
|
—
|
|
|
—
|
|
Barnett
Shale
|
495
|
|
|
|
495
|
|
|
(193)
|
|
|
302
|
|
Piceance
Basin
|
20,462
|
|
|
|
20,462
|
|
|
381
|
|
|
20,843
|
|
Total MVC shortfall
payment adjustments
|
$
|
22,699
|
|
|
|
$
|
22,699
|
|
|
$
|
188
|
|
|
$
|
22,887
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
$
|
50,864
|
|
|
|
$
|
24,224
|
|
|
$
|
26,565
|
|
|
$
|
50,789
|
|
Capital Expenditures
For the three months ended
December 31, 2014, SMLP recorded
total capital expenditures of $24.2
million, including approximately $1.8
million of maintenance capital expenditures. For the
year ended December 31, 2014, SMLP
recorded total capital expenditures of $128.3 million, including approximately
$15.9 million of maintenance capital
expenditures.
Development activities during the fourth quarter of 2014 were
related primarily to the ongoing expansion of compression capacity
on the Bison Midstream system and pipeline construction projects to
connect new receipt points on the Grand River, Bison Midstream and
DFW Midstream systems.
Capital & Liquidity
As of December 31, 2014, SMLP had total liquidity (cash
plus undrawn borrowing capacity under its $700.0 million revolving credit facility) of
$518.4 million. Based upon the
terms of SMLP's revolving credit facility and total outstanding
debt of $808.0 million, total
leverage (net debt divided by EBITDA) was approximately 3.9 to 1 as
of December 31, 2014.
Revised 2015 Financial Guidance
Commodity prices have
decreased by approximately 30% to 50% since SMLP announced its 2015
guidance in early November 2014. As a result, SMLP is
revising its 2015 adjusted EBITDA guidance from $215.0 million to $230.0 million to a new range
of $195.0 million to $210.0 million.
This revised financial guidance reflects SMLP's (i) direct exposure
to current crude oil, NGL and natural gas commodity prices for the
balance of 2015, and (ii) indirect exposure to current commodity
prices, which we believe will lead to lower drilling activity
upstream of SMLP's gathering systems.
SMLP's revised 2015 financial guidance excludes the effect of
any third party acquisitions or potential drop down transactions
with Summit Investments. SMLP is reaffirming its expectation
of completing $400.0 million to $800.0
million of acquisitions from Summit Investments, annually
through 2017.
Quarterly Distribution
On January 22, 2015, the board of directors of
SMLP's general partner declared a quarterly cash distribution of
$0.56 per unit on all outstanding
common and subordinated units, or $2.24 per unit on an annualized basis, for the
quarter ended December 31,
2014. This distribution was paid on February 13, 2015 to unitholders of record as of
the close of business on February 6,
2015. This was SMLP's ninth consecutive quarterly
distribution increase and represents an increase of $0.08 per unit, or 16.7%, over the distribution
paid for the fourth quarter of 2013 and an increase of $0.02 per unit, or 3.7%, over the distribution
paid for the third quarter of 2014.
Fourth Quarter & Full Year 2014 Earnings Call
Information
SMLP will host a conference call at 10:00 a.m. Eastern on Friday, February 27, 2015, to discuss its
quarterly and annual operating and financial results.
Interested parties may participate in the call by dialing
847-619-6547 or toll-free 888-895-5271 and entering the passcode
38990823. The conference call will also be webcast live and
can be accessed through the Investors section of SMLP's website at
www.summitmidstream.com.
A replay of the conference call will be available until
March 13, 2015 at 11:59 p.m. Eastern, and can be accessed by
dialing 888-843-7419 and entering the replay passcode
38990823#. An archive of the conference call will also be
available on SMLP's website.
Use of Non-GAAP Financial Measures
We report financial
results in accordance with U.S. generally accepted accounting
principles ("GAAP"). We also present EBITDA, adjusted EBITDA,
distributable cash flow and adjusted distributable cash flow. We
define EBITDA as net income, plus interest expense, income tax
expense, and depreciation and amortization, less interest income
and income tax benefit. We define adjusted EBITDA as EBITDA
plus adjustments related to MVC shortfall payments, impairments and
other noncash expenses or losses, less other noncash income or
gains. We define distributable cash flow as adjusted EBITDA
plus cash interest income, less cash interest paid, senior notes
interest, cash taxes paid and maintenance capital expenditures. We
define adjusted distributable cash flow as distributable cash flow
plus or minus other unusual or non-recurring expenses or income.
Our definitions of these non-GAAP financial measures may differ
from the definitions of similar measures used by other companies.
Management uses these non-GAAP financial measures in making
financial, operating and planning decisions and in evaluating our
financial performance. Furthermore, management believes that these
non-GAAP financial measures may provide users with additional
meaningful comparisons between current results and results of prior
periods as they are expected to be reflective of our core ongoing
business. These measures have limitations, and investors should not
consider them in isolation or as a substitute for analysis of our
results as reported under GAAP. Reconciliations of GAAP to
non-GAAP financial measures are attached to this release.
Comparability Related to Drop Down Transactions and
Acquisitions
With respect to drop down transactions and
third-party acquisitions, SMLP's historical results of operations
may not be comparable to its future results of operations for the
reasons described below:
- SMLP acquired Red Rock Gathering from a subsidiary of Summit
Investments in March 2014. SMLP
accounted for the Red Rock Drop Down on an "as-if pooled" basis
because the transaction was executed by entities under common
control. As such, SMLP's consolidated financial statements reflect
Summit Investments' fair value purchase accounting and the results
of operations of Red Rock Gathering since October 23, 2012 as if SMLP had owned and
operated during the common control period;
- SMLP acquired Bison Midstream from a subsidiary of Summit
Investments in June 2013. SMLP
accounted for the Bison Drop Down on an "as-if pooled" basis
because the transaction was executed by entities under common
control. As such, SMLP's consolidated financial statements reflect
Summit Investments' fair value purchase accounting and the results
of operations of Bison Midstream since February 16, 2013 as if SMLP had owned and
operated during the common control period;
- SMLP's consolidated financial statements reflect the results of
operations of Mountaineer Midstream since June 22, 2013.
About Summit Midstream Partners, LP
SMLP is a
growth-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 North America. SMLP currently provides natural
gas gathering, treating and processing services pursuant to
primarily long-term and fee-based natural gas gathering and
processing agreements with customers and counterparties in four
unconventional resource basins: (i) the Appalachian Basin, which
includes the Marcellus Shale formation in northern West Virginia; (ii) the Williston Basin, which includes the Bakken and
Three Forks shale formations in northwestern North Dakota; (iii) the Fort Worth Basin, which includes the Barnett
Shale formation in north-central Texas; and (iv) the Piceance Basin, which
includes the Mesaverde formation as well as the Mancos and Niobrara shale formations in
western Colorado and eastern
Utah. SMLP owns and operates more
than 2,300 miles of pipeline and over 250,000 horsepower of
compression. SMLP is headquartered in The
Woodlands, Texas with regional corporate offices in
Denver, Colorado and Atlanta, Georgia.
About Summit Midstream Partners, LLC
Summit Midstream
Partners, LLC ("Summit Investments") indirectly owns a 49.5%
limited partner interest in SMLP and indirectly owns and controls
the general partner of SMLP, Summit Midstream GP, LLC, which has
sole responsibility for conducting the business and managing the
operations of SMLP. Summit Investments owns, operates and is
developing various crude oil, natural gas, and water-related
midstream energy infrastructure assets in the Bakken Shale in
North Dakota, the DJ Niobrara
Shale in Colorado, and the Utica
Shale in Ohio. Summit Investments
also owns a 40% interest in a joint venture that is developing
natural gas gathering and condensate stabilization infrastructure
in the Utica Shale in southeastern Ohio. Summit Investments is a privately held
company controlled by Energy Capital Partners II, LLC, and certain
of its affiliates.
Forward-Looking Statements
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 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 2013 Annual Report on Form 10-K as updated by our
Current Report on Form 8-K filed with the Securities and Exchange
Commission on July 3, 2014 and 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.
SUMMIT MIDSTREAM
PARTNERS, LP AND SUBSIDIARIES
UNAUDITED
CONDENSED CONSOLIDATED BALANCE SHEETS
|
|
|
December
31,
|
|
2014
|
|
|
2013
|
|
(In
thousands)
|
Assets
|
|
|
|
|
Current
assets:
|
|
|
|
|
Cash and cash
equivalents
|
$
|
26,428
|
|
|
$
|
20,357
|
Accounts
receivable
|
83,612
|
|
|
67,877
|
Other current
assets
|
3,289
|
|
|
4,741
|
Total current
assets
|
113,329
|
|
|
92,975
|
Property, plant and
equipment, net
|
1,235,652
|
|
|
1,158,081
|
Intangible assets,
net
|
466,866
|
|
|
502,177
|
Goodwill
|
61,689
|
|
|
115,888
|
Other noncurrent
assets
|
17,338
|
|
|
14,618
|
Total
assets
|
$
|
1,894,874
|
|
|
$
|
1,883,739
|
|
|
|
|
|
Liabilities and
Partners' Capital
|
|
|
|
|
Current
liabilities:
|
|
|
|
|
Trade accounts
payable
|
$
|
12,852
|
|
|
$
|
25,117
|
Due to
affiliate
|
2,711
|
|
|
653
|
Deferred
revenue
|
2,377
|
|
|
1,555
|
Ad valorem taxes
payable
|
8,717
|
|
|
8,375
|
Accrued
interest
|
18,858
|
|
|
12,144
|
Other current
liabilities
|
11,939
|
|
|
11,729
|
Total current
liabilities
|
57,454
|
|
|
59,573
|
Long-term
debt
|
808,000
|
|
|
586,000
|
Noncurrent liability,
net
|
5,577
|
|
|
6,374
|
Deferred
revenue
|
55,239
|
|
|
29,683
|
Other noncurrent
liabilities
|
1,715
|
|
|
372
|
Total
liabilities
|
927,985
|
|
|
682,002
|
|
|
|
|
|
Common limited
partner capital
|
649,060
|
|
|
566,532
|
Subordinated limited
partner capital
|
293,153
|
|
|
379,287
|
General partner
interests
|
24,676
|
|
|
23,324
|
Summit Investments'
equity in contributed subsidiaries
|
—
|
|
|
232,594
|
Total partners'
capital
|
966,889
|
|
|
1,201,737
|
Total liabilities and
partners' capital
|
$
|
1,894,874
|
|
|
$
|
1,883,739
|
SUMMIT MIDSTREAM
PARTNERS, LP AND SUBSIDIARIES
UNAUDITED
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
|
|
|
Three months
ended
December
31,
|
|
Year
ended
December
31,
|
|
2014
|
|
|
2013
|
|
|
2014
|
|
|
2013
|
|
(In thousands,
except per-unit amounts)
|
Revenues:
|
|
|
|
|
|
|
|
|
|
|
Gathering services and
other fees
|
$
|
74,554
|
|
|
$
|
57,262
|
|
|
$
|
235,033
|
|
|
$
|
205,346
|
Natural gas, NGLs and
condensate sales and other
|
20,355
|
|
|
26,431
|
|
|
96,597
|
|
|
88,606
|
Amortization of
favorable and unfavorable contracts
|
(251)
|
|
|
(238)
|
|
|
(944)
|
|
|
(1,032)
|
Total
revenues
|
94,658
|
|
|
83,455
|
|
|
330,686
|
|
|
292,920
|
|
|
|
|
|
|
|
|
|
|
|
Costs and
expenses:
|
|
|
|
|
|
|
|
|
|
|
Cost of natural gas
and NGLs
|
12,004
|
|
|
9,016
|
|
|
58,094
|
|
|
44,233
|
Operation and
maintenance
|
18,765
|
|
|
17,358
|
|
|
76,272
|
|
|
72,465
|
General and
administrative
|
9,103
|
|
|
7,624
|
|
|
34,017
|
|
|
30,105
|
Transaction
costs
|
55
|
|
|
221
|
|
|
730
|
|
|
2,841
|
Depreciation and
amortization
|
21,832
|
|
|
20,761
|
|
|
82,990
|
|
|
69,962
|
Loss on asset sales,
net
|
436
|
|
|
—
|
|
|
442
|
|
|
113
|
Goodwill
impairment
|
54,199
|
|
|
—
|
|
|
54,199
|
|
|
—
|
Long-lived asset
impairment
|
5,505
|
|
|
—
|
|
|
5,505
|
|
|
—
|
Total costs and
expenses
|
121,899
|
|
|
54,980
|
|
|
312,249
|
|
|
219,719
|
Other
income
|
1,186
|
|
|
2
|
|
|
1,189
|
|
|
5
|
Interest
expense
|
(11,655)
|
|
|
(7,333)
|
|
|
(40,159)
|
|
|
(19,173)
|
(Loss) income before
income taxes
|
(37,710)
|
|
|
21,144
|
|
|
(20,533)
|
|
|
54,033
|
Income tax benefit
(expense)
|
24
|
|
|
(150)
|
|
|
(631)
|
|
|
(729)
|
Net (loss)
income
|
$
|
(37,686)
|
|
|
$
|
20,994
|
|
|
$
|
(21,164)
|
|
|
$
|
53,304
|
Less: net income
attributable to Summit Investments
|
—
|
|
|
4,649
|
|
|
2,828
|
|
|
9,720
|
Net (loss) income
attributable to SMLP
|
(37,686)
|
|
|
16,345
|
|
|
(23,992)
|
|
|
43,584
|
Less: net (loss)
income attributable to general partner, including IDRs
|
689
|
|
|
490
|
|
|
3,125
|
|
|
1,035
|
Net (loss) income
attributable to limited partners
|
$
|
(38,375)
|
|
|
$
|
15,855
|
|
|
$
|
(27,117)
|
|
|
$
|
42,549
|
|
|
|
|
|
|
|
|
|
|
|
(Loss) earnings
per limited partner unit:
|
|
|
|
|
|
|
|
|
|
|
Common unit –
basic
|
$
|
(0.65)
|
|
|
$
|
0.30
|
|
|
$
|
(0.49)
|
|
|
$
|
0.86
|
Common unit –
diluted
|
$
|
(0.65)
|
|
|
$
|
0.29
|
|
|
$
|
(0.49)
|
|
|
$
|
0.86
|
Subordinated unit –
basic and diluted
|
$
|
(0.65)
|
|
|
$
|
0.30
|
|
|
$
|
(0.44)
|
|
|
$
|
0.79
|
|
|
|
|
|
|
|
|
|
|
|
Weighted-average
limited partner units outstanding:
|
|
|
|
|
|
|
|
|
|
|
Common units –
basic
|
34,425
|
|
|
29,080
|
|
|
33,311
|
|
|
26,951
|
Common units –
diluted
|
34,425
|
|
|
29,259
|
|
|
33,311
|
|
|
27,101
|
Subordinated units –
basic and diluted
|
24,410
|
|
|
24,410
|
|
|
24,410
|
|
|
24,410
|
SUMMIT MIDSTREAM
PARTNERS, LP AND SUBSIDIARIES
UNAUDITED OTHER
FINANCIAL AND OPERATING DATA
|
|
|
Three months
ended
December
31,
|
|
Year
ended
December
31,
|
|
2014
|
|
|
2013
|
|
|
2014
|
|
|
2013
|
|
(Dollars in
thousands)
|
Other financial
data:
|
|
|
|
|
|
|
|
|
|
|
EBITDA (1)
|
$
|
(3,973)
|
|
|
$
|
49,474
|
|
|
$
|
103,556
|
|
|
$
|
144,195
|
Adjusted EBITDA
(1)
|
48,934
|
|
|
46,940
|
|
|
193,778
|
|
|
164,839
|
Capital
expenditures
|
24,179
|
|
|
34,180
|
|
|
128,325
|
|
|
109,376
|
Acquisitions of
gathering systems (2)
|
—
|
|
|
—
|
|
|
315,872
|
|
|
458,914
|
Distributable cash
flow (1)
|
35,616
|
|
|
34,937
|
|
|
139,611
|
|
|
128,141
|
Adjusted
distributable cash flow
|
35,148
|
|
|
35,158
|
|
|
140,711
|
|
|
130,982
|
Distributions
declared
|
35,093
|
|
|
26,366
|
|
|
130,951
|
|
|
96,137
|
Distribution coverage
ratio (3)
|
1.00x
|
|
|
*
|
|
1.07x
|
|
|
*
|
|
|
|
|
|
|
|
|
|
|
|
Operating
data:
|
|
|
|
|
|
|
|
|
|
|
Miles of pipeline
(end of period)
|
2,348
|
|
|
2,283
|
|
|
2,348
|
|
|
2,283
|
Aggregate average
throughput (MMcf/d)
|
1,491
|
|
|
1,223
|
|
|
1,418
|
|
|
1,138
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
* Not considered
meaningful
|
(1) Includes
transaction costs. These unusual expenses are settled in
cash.
|
(2) Reflects cash
paid and value of units issued, if any, to fund
acquisitions.
|
(3) Distribution
coverage ratio calculation for the three months ended December 31,
2014 is based on distributions in respect of the fourth quarter of
2014. Distribution coverage ratio calculation for the year ended
December 31, 2014 is based on distributions in respect of the
first, second, third and fourth quarters of 2014.
|
SUMMIT MIDSTREAM
PARTNERS, LP AND SUBSIDIARIES
UNAUDITED
RECONCILIATIONS TO NON-GAAP FINANCIAL MEASURES
|
|
|
Three months
ended
December
31,
|
|
Year
ended
December
31,
|
|
2014
|
|
|
2013
|
|
|
2014
|
|
|
2013
|
|
(Dollars in
thousands)
|
Reconciliations of
Net Income to EBITDA, Adjusted EBITDA, Distributable Cash Flow and
Adjusted Distributable Cash Flow:
|
|
|
|
|
|
|
|
|
|
|
Net (loss)
income
|
$
|
(37,686)
|
|
|
$
|
20,994
|
|
|
$
|
(21,164)
|
|
|
$
|
53,304
|
Add:
|
|
|
|
|
|
|
|
|
|
|
Interest
expense
|
11,655
|
|
|
7,333
|
|
|
40,159
|
|
|
19,173
|
Income tax (benefit)
expense
|
(24)
|
|
|
150
|
|
|
631
|
|
|
729
|
Depreciation and
amortization
|
21,832
|
|
|
20,761
|
|
|
82,990
|
|
|
69,962
|
Amortization of
favorable and unfavorable contracts
|
251
|
|
|
238
|
|
|
944
|
|
|
1,032
|
Less:
|
|
|
|
|
|
|
|
|
|
|
Interest
income
|
1
|
|
|
2
|
|
|
4
|
|
|
5
|
EBITDA
|
$
|
(3,973)
|
|
|
$
|
49,474
|
|
|
$
|
103,556
|
|
|
$
|
144,195
|
Add:
|
|
|
|
|
|
|
|
|
|
|
Adjustments related to
MVC shortfall payments (1)
|
(7,245)
|
|
|
(3,686)
|
|
|
26,565
|
|
|
17,025
|
Unit-based
compensation
|
1,197
|
|
|
1,152
|
|
|
4,696
|
|
|
3,506
|
Loss on asset sales,
net
|
436
|
|
|
—
|
|
|
442
|
|
|
113
|
Goodwill impairment
(2)
|
54,199
|
|
|
—
|
|
|
54,199
|
|
|
—
|
Long-lived asset
impairment (3)
|
5,505
|
|
|
—
|
|
|
5,505
|
|
|
—
|
Less:
|
|
|
|
|
|
|
|
|
|
|
Impact of purchase
price adjustment (4)
|
1,185
|
|
|
—
|
|
|
1,185
|
|
|
—
|
Adjusted
EBITDA
|
$
|
48,934
|
|
|
$
|
46,940
|
|
|
$
|
193,778
|
|
|
$
|
164,839
|
Add:
|
|
|
|
|
|
|
|
|
|
|
Cash interest
received
|
1
|
|
|
2
|
|
|
4
|
|
|
5
|
Less:
|
|
|
|
|
|
|
|
|
|
|
Cash interest
paid
|
1,745
|
|
|
2,468
|
|
|
31,524
|
|
|
9,016
|
Senior notes interest
(5)
|
9,750
|
|
|
5,625
|
|
|
6,733
|
|
|
12,125
|
Cash taxes
paid
|
—
|
|
|
—
|
|
|
—
|
|
|
660
|
Maintenance capital
expenditures
|
1,824
|
|
|
3,912
|
|
|
15,914
|
|
|
14,902
|
Distributable cash
flow
|
$
|
35,616
|
|
|
$
|
34,937
|
|
|
$
|
139,611
|
|
|
$
|
128,141
|
Add:
|
|
|
|
|
|
|
|
|
|
|
Transaction
costs
|
55
|
|
|
221
|
|
|
730
|
|
|
2,841
|
Regulatory compliance
costs (6)
|
898
|
|
|
—
|
|
|
1,536
|
|
|
—
|
Less:
|
|
|
|
|
|
|
|
|
|
|
Ad valorem tax
adjustment (7)
|
255
|
|
|
—
|
|
|
—
|
|
|
—
|
Write off of working
capital adjustment (8)
|
1,166
|
|
|
—
|
|
|
1,166
|
|
|
—
|
Adjusted distributable
cash flow
|
$
|
35,148
|
|
|
$
|
35,158
|
|
|
$
|
140,711
|
|
|
$
|
130,982
|
|
|
|
|
|
|
|
|
|
|
|
Distributions
declared
|
$
|
35,093
|
|
|
$
|
26,366
|
|
|
$
|
130,951
|
|
|
$
|
96,137
|
|
|
|
|
|
|
|
|
|
|
|
Distribution coverage
ratio
|
1.00x
|
|
|
*
|
|
1.07x
|
|
|
*
|
|
* Not considered
meaningful
|
(1) Adjustments
related to MVC shortfall payments account for (i) the net increases
or decreases in deferred revenue for MVC shortfall payments and
(ii) our inclusion of future expected annual MVC shortfall
payments.
|
(2) In connection
with the decline in commodity prices during the fourth quarter of
2014, we reevaluated the carrying value, including goodwill, of the
Bison Midstream gathering system and recognized a goodwill
impairment for the decline in the fair value of the underlying
reporting unit relative to its carrying value.
|
(3) During the fourth
quarter of 2014, we reviewed certain property, plant and equipment
balances associated with a DFW Midstream compressor station project
that was terminated and replaced with a pipeline looping
project. As a result, we wrote off approximately $5.5 million
of costs. The impact of this write off is reflected in long-lived
asset impairment.
|
(4) During the fourth
quarter of 2014, we identified and wrote off certain balances
previously recognized in connection with the purchase accounting
for the Legacy Grand River system. This write off was recognized as
a $1.2 million increase to other income.
|
(5) Senior notes
interest represents the net of interest expense accrued and paid
during the period. Interest on the $300.0 million 5.5% senior notes
is paid in cash semi-annually in arrears on February 15 and August
15 until maturity in August 2022. Interest on the $300.0 million
7.5% senior notes is paid in cash semi-annually in arrears on
January 1 and July 1 until maturity in July 2021.
|
(6) We incurred
expenses associated with our adoption of the 2013 Internal
Control–Integrated Framework issued by the Committee of Sponsoring
Organizations of the Treadway Commission ("COSO 2013"). These
first-year COSO 2013 expenses are not expected to be incurred
beyond 2014.
|
(7) In the fourth
quarter of 2014, we adjusted our estimate for ad valorem property
taxes for 2014. This adjustment resulted in a reduction to property
tax expense of $0.3 million for the three months ended December 31,
2014.
|
(8) During the fourth
quarter of 2014, we identified and wrote off the balance associated
with a working capital adjustment received after the purchase
accounting measurement period closed for Summit Investments'
acquisition of Red Rock Gathering. This write off was recognized as
a $1.2 million increase to gathering services and other
fees.
|
SUMMIT MIDSTREAM
PARTNERS, LP AND SUBSIDIARIES
UNAUDITED
RECONCILIATION OF SEGMENT ADJUSTED EBITDA TO ADJUSTED
EBITDA
|
|
|
Three months
ended
December
31,
|
|
Year
ended
December
31,
|
|
2014
|
|
|
2013
|
|
|
2014
|
|
|
2013
|
|
(In
thousands)
|
Segment adjusted
EBITDA:
|
|
|
|
|
|
|
|
|
|
|
Marcellus
Shale
|
$
|
4,264
|
|
|
$
|
3,332
|
|
|
$
|
15,940
|
|
|
$
|
6,333
|
Williston
Basin
|
5,822
|
|
|
4,501
|
|
|
20,422
|
|
|
16,865
|
Barnett
Shale
|
14,920
|
|
|
16,171
|
|
|
60,528
|
|
|
69,473
|
Piceance
Basin
|
27,458
|
|
|
24,661
|
|
|
107,953
|
|
|
80,941
|
Total reportable
segment adjusted EBITDA
|
52,464
|
|
|
48,665
|
|
|
204,843
|
|
|
173,612
|
Allocated corporate
expenses
|
(3,530)
|
|
|
(1,725)
|
|
|
(11,065)
|
|
|
(8,773)
|
Adjusted
EBITDA
|
$
|
48,934
|
|
|
$
|
46,940
|
|
|
$
|
193,778
|
|
|
$
|
164,839
|
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SOURCE Summit Midstream Partners, LP