Summit Midstream Partners, LP Reports Fourth Quarter and Full Year 2021 Financial and Operating Results & Provides Full Year 2022 Guidance

HOUSTON, Feb. 25, 2022

Heath Deneke, President, Chief Executive Officer and Chairman, commented, "Summit's fourth quarter financial and operating results were in-line with our expectations.  For full year 2021, adjusted EBITDA of $238 million was near the top of our $225 million to $240 million revised guidance range and almost $20 million above the midpoint of our initial guidance.  In 2021, we spent $25 million on capital expenditures, which was towards the low end of our $20 million to $35 million guidance range.  Well connect activity from our upstream customers during the fourth quarter of 2021 represented a significant increase versus the first three quarters of 2021, with 45 of the 95 wells turned-in-line behind our systems during the last quarter of the year.  We also successfully placed the Double E Pipeline in-service during the fourth quarter of 2021.  Double E is a very important new pipeline system for the northern Delaware Basin, with the initial capacity to transport an incremental 1.35 Bcf/d of natural gas from growing production in Eddy and Lea counties, New Mexico to multiple Gulf Coast oriented pipelines originating out of Waha, TX.  The pipeline is anchored by 1.0 Bcf/d of long term take-or-pay contracts from some of the largest producers in the Permian Basin and is well positioned for a highly efficient expansion to 2.0 Bcf/d as production continues to increase in the region. We are very proud of the team for delivering this important project on time, approximately 20% below the original $500 million budget, all while maintaining an outstanding safety, environmental and compliance record.  We expect Double E to be a significant growth catalyst for Summit as our initial 1.0 Bcf/d of sculpted take-or-pay contracts ramp up between 2022 and 2024 and as we secure new contracts from Northern Delaware customers that need incremental gas takeaway capacity."

"As previously announced, we also achieved a critical milestone for Summit during the fourth quarter with the successful refinancing of our 2022 debt maturities which provided an extended, multi-year runaway to continue our focus on maximizing free cash flow and further de-levering the balance sheet.  During the quarter, we also launched a cash-less preferred for common equity exchange transaction which closed in January of 2022, whereby holders of nearly $95 million of our Series A Preferred Equity, including accrued and unpaid distributions, exchanged into approximately 2.9 million SMLP common units.  This transaction enabled Summit to continue its efforts to simplify and improve the balance sheet by further reducing our outstanding fixed capital obligations while preserving cash for debt repayment.  The transaction also eliminated nearly $17 million of unpaid preferred distributions that have accrued on the balance sheet since June of 2020, while reducing the remaining amount of Series A Preferred Equity to which distributions are expected to continue to accrue by more than half.  Additionally, with the reduction in the face value of the remaining Series A Preferred Equity to a level below $100 million, SMLP is now able to issue or assume a separate class of parity preferred equity, which further enhances our strategic and financial flexibility as we continue to evaluate long-term value enhancing opportunities in the future."

"Our 2022 guidance includes an adjusted EBITDA range of $195 million to $220 million based on approximately 75 to 110 new well connections.  Given the current commodity price environment and the momentum in activity that we experienced in the second half of 2021, we are disappointed and frankly surprised by the limited amount of new wells that our customers' most recent plans are indicating will be turned on-line behind our systems in 2022.  As a point of reference, between 2017 and 2019, we averaged over 260 new well connects per year at a time when Henry Hub prices averaged below $3.00 MMbtu and WTI averaged below $60 per barrel.  At current strip pricing levels, we believe that nearly all of the remaining inventory behind our gas and crude systems would be economic to develop.  Furthermore, through a combination of industry consolidation and capital discipline, our customers have significantly improved their balance sheets and financial capability to responsibly increase development activity on the high-quality acreage behind our systems as economic conditions warrant.  While our current 2022 guidance levels do not indicate the beginning of the U-shape recovery that we have been anticipating, we continue to expect that drilling activity behind our systems will increase as our customers gain further confidence that the fundamentals underlying the current commodity price outlook will hold in the future. Last year is a good example of how customer plans can change throughout the year. Initially we expected approximately 60 new wells based on customer plans as of February 2021, and by the end of the second quarter, those plans increased to approximately 95 new wells, which was a key driver for increasing our 2021 guidance range in June of last year. Similar to last year, we plan to provide updated 2022 guidance if we expect the outlook to be materially different than our initial guidance range.  In the meantime, we will continue to focus on maximizing free cash flow and reducing debt, providing safe, efficient and reliable operations for our customers and a positive and safe work environment for our employees."

New Business Segments

As previously announced, during the fourth quarter of 2021 we implemented changes to our reportable segments.  The new segment reporting resulted from changes enacted to optimize commercial efforts and our geographic workforce in order to better align our commercial, engineering and operational capabilities.  The five reportable segments we will utilize going forward are described below, along with a management categorization of the commodity that has the most influence on customer drilling and completion decisions:

• Natural gas price driven: Our cash flows in the Northeast, Piceance and Barnett segments are significantly influenced by the price of natural gas because the drilling, completion and recompletion decisions by our customers in these segments are based on well economics most heavily impacted by the price of natural gas and natural gas liquids. Increased upstream activity by our customers in these basins therefore result in higher throughput and cash flows for those segments in which we collect fees for gathering natural gas or natural gas liquids.
• Northeast – Includes our wholly owned midstream assets located in the Utica and Marcellus shale plays and our equity method investment in Ohio Gathering that is focused on the Utica Shale
• Piceance – Includes our wholly owned midstream assets located in the Piceance Basin
• Barnett – Includes our wholly owned midstream assets located in the Barnett Shale
• Oil price driven: Customer activity and our cash flows in the Permian and Rockies segments are significantly influenced by the price of oil because the drilling and completion decisions by our customers in these segments are based on well economics most heavily impacted by the price of oil. Decisions to drill and complete wells in these basins therefore result in higher throughput and cash flows for our midstream assets in which we collect fees for gathering or processing hydrocarbons, gathering produced water, or transporting natural gas.
• Permian – Includes our wholly owned midstream assets located in the Permian Basin and our equity method investment in the Double E Pipeline
• Rockies – Includes our wholly owned midstream assets located in the Williston Basin and the DJ Basin

A comparison of prior and current reportable segments is listed in the table below for illustrative purposes.