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03.05.2018 22:20
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Summit Midstream Partners, LP Reports First Quarter 2018 Financial Results
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PR Newswire
THE WOODLANDS, Texas, May 3, 2018
THE WOODLANDS, Texas, May 3, 2018 /PRNewswire/ -- Summit Midstream Partners, LP (NYSE: SMLP) announced today its financial and operating results for the three months ended March 31, 2018. SMLP reported a net loss of $3.8 million for the first quarter of 2018 compared to a net loss of $0.6 million for the prior-year period. Net income in the first quarter of 2018 included $21.7 million of non-cash expense related to the increase in the present value of the estimated Deferred Purchase Price Obligation ("DPPO"). Net income for the prior-year period included $20.9 million of non-cash DPPO expense and $22.0 million of expense related to an early extinguishment of debt. Net cash provided by operations totaled $51.2 million in the first quarter of 2018 compared to $62.4 million in the prior-year period. This reduction is primarily related to a third quarter 2017 contract amendment with a certain Piceance/DJ Basins customer which required this customer, beginning July 2017, to make MVC shortfall payments monthly, rather than what historically had been an annual payment in the first quarter of the year. Adjusted EBITDA totaled $70.3 million and distributable cash flow ("DCF") totaled $44.2 million for the first quarter of 2018 compared to $71.4 million and $53.0 million, respectively, for the prior-year period. Adjusted EBITDA and DCF for the prior-year period includes $2.6 million of income related to a business interruption insurance claim.
Natural gas volume throughput averaged 1,737 million cubic feet per day ("MMcf/d") in the first quarter of 2018, an increase of 6.8% compared to 1,627 MMcf/d in the prior-year period, and a decrease of 1.4% compared to 1,761 MMcf/d in the fourth quarter of 2017. SMLP's natural gas volume throughput metrics exclude its proportionate share of volume from its 40% ownership interest in Ohio Gathering. Crude oil and produced water volume throughput in the first quarter of 2018 averaged 85.0 thousand barrels per day ("Mbbl/d"), an increase of 11.3% compared to 76.4 Mbbl/d in the prior-year period, and an increase of 14.7% compared to 74.1 Mbbl/d in the fourth quarter of 2017.
Steve Newby, President and Chief Executive Officer, commented, "SMLP reported in-line financial and operating results for the first quarter of 2018, and is on target to deliver on its 2018 financial guidance. As we look across the balance of 2018 and into 2019, we are encouraged about our business, our balance sheet and our long-term growth potential. We have a number of growth catalysts that will positively impact our operating and financial results beginning in the fourth quarter of 2018. These catalysts include the start-up of our 60 MMcf/d Delaware Basin gathering and processing assets in the third quarter of 2018, the start-up of our 60 MMcf/d DJ Basin processing plant in the fourth quarter of 2018 and the anticipated growth in our Williston and Utica operations, given current producer activity levels. We expect these catalysts to provide significant EBITDA growth and an expansion of our distribution coverage ratio beginning in the fourth quarter of 2018. The $300.0 million 9.50% Series A preferred equity transaction that we completed in the fourth quarter of 2017 strengthened our credit profile by de-levering our balance sheet, and more than satisfied our equity needs for 2018."
Double E Project Update
In January 2018, SMLP announced a non-binding open season for its proposed Double E Pipeline project ("Double E"), a greenfield development project designed to provide firm natural gas transportation service from various receipt points in the Delaware Basin in New Mexico and Texas to various delivery points around the Waha Hub.
SMLP has received a high level of interest in the project and is currently working with several potential anchor shippers on binding precedent agreements to ship natural gas on Double E. Based on shipper interest in the project, SMLP expects to expand the initial capacity of the Double E Pipeline beyond the 1.0 billion cubic feet per day ("Bcf/d") originally contemplated. SMLP estimates that the project cost will range from $400.0 million to $450.0 million, pending a final decision on route and pipeline size. Project-related capital expenditures in 2018 and 2019, in the aggregate, are expected to account for less than 15% of the total investment, with more meaningful expenditures occurring in 2020 and 2021.
SMLP has also received significant interest from potential shippers and other parties concerning equity participation in the project. SMLP is evaluating those alternatives, and expects to make its final investment decision on the project by the end of the third quarter of 2018. SMLP is currently targeting an in-service date for the project in the second quarter of 2021.
First Quarter 2018 Segment Results
The following table presents average daily throughput by reportable segment:
| | | Three months ended March 31, | | |||||
| | | 2018 | | | 2017 | | ||
| Average daily throughput (MMcf/d): | | | | | | | | |
| Utica Shale | | | 356 | | | | 275 | |
| Williston Basin | | | 18 | | | | 17 | |
| Piceance/DJ Basins | | | 578 | | | | 615 | |
| Barnett Shale | | | 263 | | | | 286 | |
| Marcellus Shale | | | 522 | | | | 434 | |
| Aggregate average daily throughput | | | 1,737 | | | | 1,627 | |
| | | | | | | | | |
| Average daily throughput (Mbbl/d): | | | | | | | | |
| Williston Basin | | | 85.0 | | | | 76.4 | |
| Aggregate average daily throughput | | | 85.0 | | | | 76.4 | |
| | | | | | | | | |
| Ohio Gathering average daily throughput (MMcf/d) (1) | | | 771 | | | | 769 | |
| ________ | |
| (1) | Gross basis, represents 100% of volume throughput for Ohio Gathering, based on a one-month lag. |
Utica Shale
The Utica Shale reportable segment includes Summit Midstream Utica ("SMU"), a natural gas gathering system located in Belmont and Monroe counties in southeastern Ohio. SMU gathers and delivers dry natural gas to interconnections with a third-party intrastate pipeline that provides access to the Clarington Hub.
Segment adjusted EBITDA for the first quarter of 2018 totaled $8.7 million, up 10.1% from $7.9 million for the prior-year period, primarily due to higher volume throughput, partially offset by higher operating expenses. Volume throughput averaged 356 MMcf/d in the first quarter of 2018, compared to 275 MMcf/d in the prior-year period and 369 MMcf/d in the fourth quarter of 2017. Volume throughput for the first quarter of 2018 increased relative to the prior-year period due to the completion of 15 new wells in 2017, including two new wells completed in December 2017. In addition, first quarter 2018 volumes included an incremental 40 MMcf/d from the TPL-7 Connector Project which was commissioned in the second quarter of 2017. No volume flowed through the TPL-7 Connector Project in the prior-year period and 48 MMcf/d flowed in the fourth quarter of 2017. Volume throughput in the first quarter of 2018 was impacted by temporary production curtailments upstream of the SMU system which we estimate impacted volumes by approximately 15 MMcf/d.
We expect volume growth resuming behind the SMU system in the second quarter of 2018, and we are currently in the process of completing several pad connections to facilitate an acceleration of SMU volume growth in the second half of 2018.
Ohio Gathering
The Ohio Gathering reportable segment includes our 40% ownership interest in Ohio Gathering, a natural gas gathering system spanning the condensate, liquids-rich and dry gas windows of the Utica Shale in Harrison, Guernsey, Noble, Belmont and Monroe counties in southeastern Ohio. This segment also includes our 40% ownership interest in Ohio Condensate, a condensate stabilization facility located in Harrison County, Ohio. Segment adjusted EBITDA for the Ohio Gathering segment includes our proportional share of adjusted EBITDA from Ohio Gathering and Ohio Condensate, based on a one-month lag.
Segment adjusted EBITDA for the first quarter of 2018 totaled $10.5 million, an increase of 15.5% from $9.1 million for the prior-year period, primarily due to lower operating expenses together with slightly higher volumes and incremental compression revenue. Volume throughput on the Ohio Gathering system averaged 771 MMcf/d, gross, in the first quarter of 2018 compared to 769 MMcf/d, gross, in the prior-year period and 825 MMcf/d, gross, in the fourth quarter of 2017. Volume throughput in the first quarter of 2018 was down 6.5% compared to the fourth quarter of 2017 due to natural declines from wells commissioned in the second half of 2017. No new wells were connected in the first quarter of 2018.
We expect volume growth beginning in the third quarter of 2018, with new well connections beginning late in the second quarter of 2018 and continuing through the end of 2018.
Williston Basin
The Polar and Divide, Tioga Midstream and Bison Midstream systems provide our midstream services for the Williston Basin reportable segment. The Polar and Divide system gathers crude oil in Williams and Divide counties in North Dakota and delivers to third-party intra- and interstate pipelines as well as third-party rail terminals. The Polar and Divide system also gathers and delivers produced water to various third-party disposal wells in the region. Tioga Midstream is a crude oil, produced water and associated natural gas gathering system in Williams County, North Dakota. All crude oil and natural gas gathered on the Tioga Midstream system is delivered to third-party pipelines, and all produced water is delivered to third-party disposal wells. Bison Midstream gathers associated natural gas production in Mountrail and Burke counties in North Dakota and delivers to third-party pipelines serving a third-party processing plant in Channahon, Illinois.
Segment adjusted EBITDA for the Williston Basin segment totaled $16.0 million for the first quarter of 2018 compared to $17.8 million for the prior-year period. The $1.8 million reduction is primarily due to the prior-year period's inclusion of $2.6 million of income related to a business interruption insurance claim, partially offset by higher volume throughput. Liquids volumes averaged 85.0 Mbbl/d in the first quarter of 2018, an increase of 11.3% from 76.4 Mbbl/d in the prior-year period and an increase of 14.7% compared to the fourth quarter of 2017. Liquids volumes in the prior-year period were negatively impacted by severe weather.
Compared to the prior-year period, first quarter 2018 liquids volumes were positively impacted by the completion of 46 new wells in 2017, including 20 new wells completed late in the fourth quarter of 2017, and another 10 new wells in the first quarter of 2018. First quarter 2018 volumes also benefitted from the addition of a new customer in the fourth quarter of 2017, that commissioned several new wells during the quarter and accounted for approximately 20% of our sequential quarterly volume growth. Liquids volumes in the first quarter of 2018 were negatively impacted by an estimated 13.0 Mbbl/d related to certain customers trucking dedicated liquids volumes due to third-party produced water disposal capacity issues, and certain customers implementing crude oil production curtailments related to simultaneous completion activities on pad sites with existing production.
Associated natural gas volumes averaged 18 MMcf/d in the first quarter of 2018, an increase of 5.9% from 17 MMcf/d in the prior-year period and a decrease of 5.3% from 19 MMcf/d in the fourth quarter of 2017. Volumes in the prior-year period were negatively impacted by severe weather in the first quarter of 2017. No new natural gas wells were completed in the first quarter of 2018.
We expect that our customers will continue to drill and complete new wells throughout the balance of 2018, resulting in increased liquids volume throughput.
Piceance/DJ Basins
The Grand River and the Niobrara G&P systems provide our midstream services for the Piceance/DJ Basins reportable segment. These systems provide natural gas gathering and processing services for producers operating in the Piceance Basin located in western Colorado and eastern Utah and in the Denver-Julesburg ("DJ") Basin located in northeastern Colorado.
Segment adjusted EBITDA totaled $29.2 million for the first quarter of 2018, an increase of 0.9% from $29.0 million for the prior-year period, primarily due to increased volume throughput from the higher-margin Niobrara G&P system, partially offset by lower volumes on the Grand River system and higher expenses. First quarter 2018 volume throughput averaged 578 MMcf/d, a decrease of 6.0% from 615 MMcf/d in the prior-year period and an increase of 0.5% from 575 MMcf/d in the fourth quarter of 2017. Volume declines relative to the prior-year period were primarily due to natural declines from producing wells on the system, partially offset by the completion of 50 new wells in the first quarter of 2018. This activity was partially offset by the impact of our anchor customer's continued suspension of drilling activities behind our gathering system, and the resulting natural declines from existing production, which was partially offset by contractual MVC shortfall payments.
We expect that the DJ Basin will continue to experience volume growth throughout the balance of 2018 and that the new 60 MMcf/d processing plant will be commissioned at the end of the fourth quarter of 2018. We expect significant drilling and completion activity in and around this asset for the foreseeable future.
Barnett Shale
The DFW Midstream system provides our midstream services for the Barnett Shale reportable segment. This system gathers and delivers low-pressure natural gas received from pad sites, primarily located in southeastern Tarrant County, Texas, to downstream intrastate pipelines serving various natural gas hubs in the region.
Segment adjusted EBITDA for the Barnett Shale segment totaled $9.9 million for the first quarter of 2018, a decrease of 18.4% from $12.1 million for the prior-year period, primarily due to lower volume throughput, together with $1.3 million of lower adjustments related to MVC shortfall payments related to the expiration of an MVC obligation beginning in the third quarter of 2017. Volume throughput in the first quarter of 2018 averaged 263 MMcf/d, which was down 8.0% compared to the prior-year period average of 286 MMcf/d and up 1.9% from 258 MMcf/d in the fourth quarter of 2017. Volume throughput for the first quarter of 2018 was impacted by natural production declines, partially offset by the commissioning of six new wells during the quarter. One customer is currently operating a drilling rig in our Barnett Shale segment, and we expect this will lead to new wells being commissioned in the second half of 2018.
Marcellus Shale
The Mountaineer Midstream system provides our midstream services for the Marcellus Shale reportable segment. This system gathers high-pressure natural gas received from upstream pipeline interconnections with Antero Midstream Partners, LP and Crestwood Equity Partners LP. Natural gas on the Mountaineer Midstream system is delivered to the Sherwood Processing Complex located in Doddridge County, West Virginia.
Segment adjusted EBITDA for the Marcellus Shale segment totaled $6.7 million for the first quarter of 2018, an increase of 18.2% from $5.6 million for the prior-year period, primarily due to an increase in volume throughput. Volume throughput for this segment averaged 522 MMcf/d in the first quarter of 2018, an increase of 20.3% from 434 MMcf/d in the prior-year period and a decrease of 3.3% from 540 MMcf/d in the fourth quarter of 2017. Volume throughput growth relative to the prior-year period resulted from our customer completing 27 new wells behind our system in 2017, and another 9 new wells late in the first quarter of 2018.
MVC Shortfall Payments
SMLP billed its customers $14.3 million in the first quarter of 2018 related to MVC shortfalls. For those customers that do not have credit banking mechanisms in their gathering agreements, or do not have the ability to use MVC shortfall payments as credits, the MVC shortfall payments are accounted for as gathering revenue in the period that they are earned. For the first quarter of 2018, SMLP recognized $14.3 million of gathering revenue associated with MVC shortfall payments from certain customers in the Williston Basin, Barnett Shale, Piceance/DJ Basins and Marcellus Shale reportable segments. There were no MVC shortfall payment adjustments in the first quarter of 2018. SMLP's MVC shortfall payment mechanisms contributed $14.3 million of adjusted EBITDA in the first quarter of 2018.
| | Three months ended March 31, 2018 | | ||||||||||||||
| | MVC Billings | | | | Gathering | | | Adjustments | | | Net impact | | ||||
| | (In thousands) | | ||||||||||||||
| Net change in deferred revenue related to MVC shortfall payments: | | | | | | | | | | | | | | | | |
| Utica Shale | $ | — | | | | $ | — | | | $ | — | | | $ | — | |
| Williston Basin | | — | | | | | — | | | | — | | | | — | |
| Piceance/DJ Basins | | 3,514 | | | | | 3,514 | | | | — | | | | 3,514 | |
| Barnett Shale | | — | | | | | — | | | | — | | | | — | |
| Marcellus Shale | | — | | | | | — | | | | — Werbung Mehr Nachrichten zur SUMMIT MIDSTREAM P.LP UTS Aktie kostenlos abonnieren
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