News Column

Summit Midstream Partners, LP Reports Second Quarter 2014 Financial & Operating Results

August 22, 2014



By a News Reporter-Staff News Editor at Energy Weekly News -- Summit Midstream Partners, LP (NYSE: SMLP) announced financial and operating results for the three and six months ended June 30, 2014. SMLP reported adjusted EBITDA of $48.0 million and adjusted distributable cash flow of $34.7 million for the second quarter of 2014, an increase of 30.5% and 14.6%, respectively, over the second quarter of 2013. SMLP reported $4.0 million of net income for the second quarter of 2014 compared to $8.8 million for the second quarter of 2013. Volume throughput on SMLP's assets averaged 1,403 million cubic feet per day ("MMcf/d") in the second quarter of 2014, an increase of 32.4% over 1,060 MMcf/d in the second quarter of 2013.

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For the six months ended June 30, 2014, SMLP reported adjusted EBITDA of $94.6 million, an increase of $21.0 million, or 28.5%, over the comparable period in 2013. Adjusted distributable cash flow totaled $69.0 million for the first six months of 2014, an increase of $6.3 million, or 10.1%, over the comparable period in 2013. Net income totaled $10.4 million for the first six months of 2014 compared to $22.6 million in the comparable period in 2013. Volume throughput averaged 1,356 MMcf/d for the six months ended June 30, 2014, an increase of 26.1% over the comparable period in 2013.

Steve Newby, President and Chief Executive Officer of SMLP commented, "The second quarter was another record quarter for Summit with volume throughput averaging 1.4 Bcf/d, an increase of more than 32% over the second quarter of 2013. Importantly, each of our operating systems experienced sequential quarterly volume growth led by the continued ramp up of our Mountaineer System in the core of the Marcellus Shale. Our Red Rock system, which we acquired from Summit Investments in the first quarter of 2014, is outperforming our expectations. We are particularly encouraged by the level of producer activity around our DFW Midstream system which we expect will drive additional growth in the near term. Additionally, our team successfully resolved the operating issues on our Bison Midstream system during the quarter, which resulted in volume throughput growth of more than 26% over the first quarter of 2014."

"Our strong second quarter financial results, together with our long-term growth outlook, enabled us to deliver our seventh consecutive quarterly distribution increase to unitholders, growing distributions per unit by 19.5% over the second quarter of 2013 and 4.0% over the first quarter of 2014. Our inventory of assets under development at Summit Investments continues to grow with over $300 million of new Bakken Shale projects previously announced in the second quarter of 2014. Given the strategic position of Summit Investments' assets, which are located in some of the most attractive basins in the United States, we expect to continue to generate new organic development opportunities, which we believe will further enhance SMLP's long-term growth visibility."

Financial and operating results for the six months ended June 30, 2014 benefitted from SMLP's June 2013 acquisition of Mountaineer Midstream Company, LLC ("Mountaineer Midstream"), which was acquired from an affiliate of MarkWest Energy Partners, L.P. ("MarkWest").

SMLP's financial and operating results retrospectively include financial and operating results from Bison Midstream since February 16, 2013, and from the Red Rock system since October 23, 2012, the date that each was originally acquired by Summit Investments.

Volume throughput on the Mountaineer Midstream system averaged 366 MMcf/d in the second quarter of 2014, up 28.1% over the first quarter of 2014 due to a continuation of active drilling by our anchor customer, Antero Resources Corp. ("Antero"). We are currently in the process of expanding throughput capacity on the Mountaineer Midstream system to 1,050 MMcf/d to support Antero's current and future anticipated drilling activities. The revenues associated with the incremental volume throughput will be driven by higher pressure natural gas gathering services. Volumes are expected to continue to grow on this system throughout the balance of 2014 as new Antero wells are connected by third parties upstream of our system and as processing capacity at MarkWest's Sherwood Processing Complex increases from 600 MMcf/d currently, to 1.4 billion cubic feet per day ("Bcf/d") by the third quarter of 2015.

Volume throughput on the Bison Midstream system averaged 15 MMcf/d in the second quarter of 2014, up 26.2% over the first quarter of 2014, but down 8.1% over the second quarter of 2013. Volume throughput on the Bison Midstream system grew continuously during the second quarter of 2014 increasing from approximately 14 MMcf/d in April to approximately 19 MMcf/d in June. The extreme winter weather and operational issues that negatively impacted volume throughput on the Bison Midstream system since the third quarter of 2013 were resolved in the second quarter of 2014. We expect volume growth to continue throughout the second half of 2014 as we continue to connect new pad sites and expand the system's compression capacity. We currently have four compressor expansion projects underway on the Bison Midstream system including the construction of two new compressor stations to support producer activity.

Volume throughput on the DFW Midstream system averaged 350 MMcf/d in the second quarter of 2014, up 0.6% from the first quarter of 2014, but down 11.5% from the second quarter of 2013. This is the first time since the first quarter of 2013 that DFW Midstream has experienced sequential quarterly volume growth. Volume growth resulted from several customers bringing new wells online early in the second quarter of 2014. The new incremental volume throughput offset both the natural decline of existing wells on the system and the continuation from several customers to temporarily shut-in pad sites to drill or complete new wells. Given current drilling activity and producer plans in our service area, DFW Midstream volume throughput is expected to continue to increase throughout the second half of 2014.

In July 2014, SMLP executed an agreement with an affiliate of Energy Spectrum Capital to acquire Texas Energy Midstream, L.P. ("TEM") for approximately $11.0 million. TEM is a natural gas gathering system with approximately 13 MMcf/d of current throughput from two customers that are developing acreage in Mansfield, TX, adjacent to the southern border of the DFW Midstream service area. The acquisition is expected to close by the end of the third quarter of 2014.

Volume throughput on the Grand River system averaged 672 MMcf/d in the second quarter of 2014, 1.4% over the first quarter of 2014, and 5.6% over the second quarter of 2013. Volume throughput increased in the second quarter of 2014 primarily due to growing volumes from the Red Rock system, which was favorably impacted by new pad site connections for WPX Energy, Inc., and Ursa Resources Group II, and the March 2014 start-up of the 20 MMcf/d cryogenic processing plant for Black Hills Corporation to process liquids-rich Mancos/Niobrara gas. Volume throughput on the legacy Grand River system totaled 464 MMcf/d in the second quarter of 2014, down 4.7% over the first quarter of 2014, and resulted from our anchor customer, Encana Corp.'s, temporary suspension of drilling activities in the Piceance Basin in 2014.

The Grand River system continues to benefit from its natural gas gathering agreements, which include minimum volume commitments ("MVCs") that increase in both rate and volume commitment over the next few years, and largely mitigate the financial impact associated with declining volumes from certain customers. Lower volume throughput from certain Grand River customers during the second quarter of 2014 translated into larger MVC shortfall payments, thereby minimizing the impact on adjusted EBITDA.

Keywords for this news article include: Energy, Oil & Gas, Natural Gas, Summit Midstream Partners Lp.

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Source: Energy Weekly News


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