Summit Midstream Partners, LP Reports Second Quarter 2019 Financial Results

THE WOODLANDS, Texas, Aug. 9, 2019 /PRNewswire/ -- Summit Midstream Partners, LP (NYSE: SMLP) announced today its financial and operating results for the three months ended June 30, 2019, including net income of $4.8 million, adjusted EBITDA of $68.6 million, distributable cash flow of $38.4 million, and a distribution coverage ratio of 1.62x.

Leonard Mallett, interim President and Chief Executive Officer, commented, "SMLP's second quarter of 2019 results were driven by adjusted EBITDA growth in our Utica Shale, Ohio Gathering, and DJ Basin segments. In addition, our quarterly results benefitted from an enhanced focus on expense control, which we expect will have a greater impact on our financial results in the second half of the year. We are encouraged by the outlook for the second half of 2019, and have already seen many of our customers increase completion activity across our systems. With respect to our financial guidance, we expect for full year 2019 adjusted EBITDA to be at the low end of our $295.0 million to $315.0 million range, primarily due to a more moderated ramp of volume growth in our Permian Basin and Utica Shale segments."

"I am proud of our team for executing on two critical milestones during the second quarter of 2019. First, the successful commissioning of our new 60 MMcf/d processing plant substantially increased our processing capacity in the DJ Basin, and current throughput levels are approximately 50% higher than those reported for the second quarter of 2019. Second, our new joint venture with Exxon Mobil for the Double E Pipeline will significantly increase our scale in the Permian Basin and will diversify our overall business. In addition, the 10-year precedent agreements secured by Double E will provide SMLP with a stable source of cash flows for many years to come. Project execution for Double E has kicked off in earnest, and the section 7(c) application for Double E was filed with the FERC in late July."

"Our team's focus for the balance of the year will be aimed at executing on our strategic plan, including our ongoing evaluation of asset sales and other opportunities to further strengthen and accelerate deleveraging. We are optimistic that we will be able to demonstrate notable progress on these efforts before the end of 2019."

Double E Pipeline
In June 2019, SMLP decided to proceed with the Double E Pipeline ("Double E"), after having secured sufficient transportation commitments, and having executed definitive joint venture agreements with a subsidiary of Exxon Mobil Corporation ("Exxon"). Double E will provide natural gas transportation service from multiple receipt points in the Delaware Basin to various delivery points in and around the Waha Hub in Texas. Double E has secured binding 10-year take-or-pay volume commitments for a substantial majority of its initial throughput capacity of 1.35 billion cubic feet per day ("Bcf/d") from several of the largest and most respected production companies operating in the Delaware Basin. Commercial discussions with additional potential shippers are ongoing and SMLP will look for opportunities to subscribe the limited remaining capacity prior to commissioning.

SMLP owns 70% of Double E, will lead the development, permitting and construction of the project, and will operate the pipeline system upon commissioning. SMLP estimates that the capital expenditures required to fully develop the project will total approximately $500 million, that its share of the capital expenditures will be approximately $350 million, and that more than 90% of those capital expenditures will be incurred in 2020 and 2021.

Double E filed its section 7(c) application with the Federal Energy Regulatory Commission in July 2019. Assuming timely receipt of the requisite regulatory approvals, SMLP expects that the project will be placed into service in the third quarter of 2021.

Second Quarter 2019 Segment Results
The following table presents average daily throughput by reportable segment:


                                               Three          Six months ended June
                                               months                
              30,
                                              ended June
                                                    30,



                                         2019            2018                             2019   2018



                 Average daily
                  throughput (MMcf/d):



     Utica Shale                                  260                                415        273    386


      Williston Basin                               11                                 18         13     18



     DJ Basin                                      20                                 16         21     15



     Permian Basin                                 17                                           16



     Piceance Basin                               462                                560        473    562



     Barnett Shale                                251                                264        260    263


      Marcellus Shale                              347                                524        363    523



                 Aggregate average daily
                  throughput                     1,368                              1,797      1,419  1,767





                 Average daily
                  throughput (Mbbl/d):


      Williston Basin                             94.3                               88.9       98.6   86.9



                 Aggregate average daily
                  throughput                      94.3                               88.9       98.6   86.9





                 Ohio Gathering average
                  daily throughput                 713                                727        712    749

                     (MMcf/d) (1)


              __________


               (1) Gross basis, represents 100%
                of volume throughput for Ohio
                Gathering, subject to 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 second quarter of 2019 totaled $6.6 million, up 7.2% from $6.2 million in the first quarter of 2019. Volume throughput averaged 260 MMcf/d in the second quarter of 2019, and included 220 MMcf/d of volumes gathered from pad sites directly connected to the SMU gathering system and 40 MMcf/d from the TPL-7 Connector, which generates a substantially lower gathering margin. Higher margin volumes from pad sites directly connected to the SMU gathering system increased by 7.3% compared to the first quarter of 2019, the second consecutive quarter that this metric increased. Volumes in the second quarter of 2019 benefitted from four new wells that were turned in line late in the quarter. Second quarter of 2019 results were impacted by approximately 23 MMcf/d of temporary volume curtailments associated with infill drilling and completion activities on existing pad sites.

Our customers are currently operating one drilling rig upstream of the SMU gathering system, and as a result, we continue to expect that Utica Shale segment adjusted EBITDA for the second half of 2019 will be higher than the $12.8 million generated in the first half of the year.

Ohio Gathering
The Ohio Gathering reportable segment includes our ownership interest in the Ohio Gathering system, 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, as well as our 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, subject to a one-month lag.

Segment adjusted EBITDA for the second quarter of 2019 totaled $9.9 million, up 7.9% from $9.2 million in the first quarter of 2019. Volume throughput on the Ohio Gathering system averaged 713 MMcf/d, gross, in the second quarter of 2019, compared to 711 MMcf/d, gross, in the first quarter of 2019. Volumes benefitted from a consistent level of drilling and completion activity, with 13 new well connections in the second quarter of 2019, including five new wells that were connected in the last month of the quarter and are expected to have a more meaningful impact in the third quarter of 2019. Our customers currently have 32 drilled but uncompleted wells ("DUCs") in inventory, and, beginning in the third quarter of 2019, we expect to see completion activities shift from the condensate window to the more prolific wet gas window of the play, which supports our expectation for higher volumes throughout the balance of 2019.

Williston Basin
The Polar and Divide 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. 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 $16.7 million in the second quarter of 2019, compared to $18.7 million in the first quarter of 2019. Lower segment adjusted EBITDA was primarily related to the sale of Tioga Midstream, which closed on March 22, 2019 and contributed approximately $0.9 million to segment adjusted EBITDA in the first quarter of 2019.

Liquids volumes in the second quarter of 2019 averaged 94.3 Mbbl/d compared to 103.0 Mbbl/d in the first quarter of 2019, primarily as a result of (i) the sale of the Tioga Midstream system and (ii) natural production declines associated with 44 new wells that were commissioned behind the Polar and Divide system in the second half of 2018. Natural gas volumes in the second quarter of 2019 averaged 11 MMcf/d compared to 16 MMcf/d in the first quarter of 2019, primarily as a result of (i) the sale of the Tioga Midstream system and (ii) maintenance on third party-owned infrastructure located downstream of the Bison Midstream system, which created an operational disruption on the Bison Midstream system for approximately 15 days during the quarter. Our customers are currently operating one drilling rig upstream of our Bison Midstream system and we expect to connect eight new associated natural gas wells in the fourth quarter of 2019.

Our Polar and Divide system customers in the Williston Basin connected 23 new wells in the second quarter of 2019, including 12 wells at the end of the quarter, which resulted in average liquids volumes of more than 100 Mbbl/d for the last ten days of the second quarter of 2019. We maintain a robust outlook for liquids volumes and Williston Basin segment adjusted EBITDA for the second half of the year, based on our expectation for approximately 50 new well connections in the second half of 2019, which is supported by two active drilling rigs and 36 DUCs that our customers have in inventory.

DJ Basin
The DJ Basin reportable segment includes the Niobrara Gathering & Processing system ("Niobrara G&P"), an associated natural gas gathering and processing system located in the DJ Basin in northeastern Colorado. Niobrara G&P delivers residue gas to the Colorado Interstate Gas and Trailblazer Pipeline and processed NGLs to the Overland Pass Pipeline.

Segment adjusted EBITDA for the second quarter of 2019 totaled $2.8 million, up 5.3% from $2.7 million in the first quarter of 2019. Volume throughput averaged 20 MMcf/d in the second quarter of 2019, compared to 21 MMcf/d in the first quarter of 2019, primarily due to approximately two weeks of planned downtime associated with the commissioning of our new 60 MMcf/d processing plant, which was placed into service in June 2019. Segment adjusted EBITDA was higher for the second quarter of 2019 compared to the prior quarter, despite lower quarterly volume throughput, due to a shift in volume mix in favor of a customer that generates a higher gathering and processing rate.

Volumes at our new processing plant are currently averaging more than 30 MMcf/d and are expected to ramp throughout the balance of 2019, based on existing production behind our system and new production associated with our customers' drilling and completion schedules, which includes two rigs that are currently operating upstream of the Niobrara G&P system and 23 DUCs that our customers have in inventory.

The commissioning of the new processing plant also triggered a $0.6 million per month contractual demand payment that will complement higher revenues associated with the expanded processing capacity. SMLP will begin recognizing these new demand payments in the third quarter of 2019.

Permian Basin
The Permian Basin reportable segment includes Summit Midstream Permian ("Summit Permian"), an associated natural gas gathering and processing system located in the northern Delaware Basin in southeastern New Mexico. Summit Permian operates the 60 MMcf/d Lane Gathering & Processing system ("Lane G&P"), which delivers residue gas to the Transwestern Pipeline and processed NGLs to the Lone Star Express pipeline.

Segment adjusted EBITDA for the second quarter of 2019 totaled ($0.7) million compared to ($0.6) million in the first quarter of 2019. Segment adjusted EBITDA was negatively impacted by $0.8 million of higher operating expenses compared to the first quarter of 2019, primarily related to the continued build-out and establishment of our operations in this new region.

Volume throughput averaged 17 MMcf/d in the second quarter of 2019, up 13.3% from the prior quarter, and benefited from the commissioning of the Blue Quail Compressor Station at the end of the quarter, which facilitated a new source of volume on the Lane G&P system. Our customers currently have 13 DUCs in inventory, and we expect to connect these wells in the second half of 2019.

Legacy Areas
Our Legacy Areas, which include our Piceance Basin, Barnett Shale, and Marcellus Shale reportable segments, are located in production basins in which we expect our gathering systems to experience relatively lower long-term growth and to attract a minority of our capital expenditures. Our Legacy Areas are served by the Grand River system for the Piceance Basin reportable segment, the DFW Midstream system for the Barnett Shale reportable segment, and the Mountaineer Midstream system for the Marcellus Shale reportable segment.

Segment adjusted EBITDA for the Piceance Basin, Barnett Shale, and Marcellus Shale reportable segments totaled $40.4 million in the second quarter of 2019, compared to $42.5 million in the first quarter of 2019. There were no new wells connected in our Legacy Areas during the second quarter of 2019, and as a result, total volume throughput declined by 6.5% compared to the first quarter of 2019. We expect drilling and completion activity in our Legacy Areas to resume in the third quarter of 2019 as a result of (i) the completion of three DUCs located upstream of the DFW Midstream system, which are located on the same pad site that has the largest well ever drilled in the region and (ii) the completion of five Mountaineer Midstream DUCs early in the fourth quarter of 2019.

We incurred $0.3 million of total capital expenditures in our Legacy Areas in the second quarter of 2019, or less than 1.0% of the total capital expenditures incurred by SMLP for the period. Total segment adjusted EBITDA exceeded total segment capital expenditures for our Legacy Areas in the second quarter of 2019 by $40.1 million.

MVC Shortfall Payments
SMLP billed its customers $12.1 million in the second quarter of 2019 related to MVC shortfalls. For those customers that do not have MVC shortfall credit banking mechanisms in their gathering agreements, the MVC shortfall payments are accounted for as gathering revenue in the period in which they are earned. In the second quarter of 2019, SMLP recognized $12.5 million of gathering revenue associated with MVC shortfall payments. SMLP also recognized $3.5 million of adjustments to MVC shortfall payments in the second quarter of 2019, primarily related to future expected shortfall payments from customers in the Williston Basin segment and the Barnett Shale segment. SMLP's MVC shortfall payment mechanisms contributed $­­16.0 million of total adjusted EBITDA in the second quarter of 2019.


                                                                    Three
              
               months
             
       ended
                                                                                 June
                
            30, 2019



                                                     MVC Billings                                                         Gathering                     Adjustments                       Net impact

                                                                                                                           revenue                      to MVC                       to adjusted

                                                                                                                                                        shortfall                          EBITDA

                                                                                                                                                        payments



                                                                        
           
               (In thousands)


                   Net change in deferred
                    revenue related to MVC

                                           shortfall
                            payments:



     Piceance Basin                                                         $
             3,390                                             $
        3,390            
      $                                    $
       3,390



                   Total net change                                $
           
               3,390                                        $
      
          3,390 
            
        $                                $
     
         3,390





                   MVC shortfall payment
                    adjustments:


      Williston Basin                                                          $
             914                                               $
        914                     $
       2,081                      $
       2,995



     Piceance Basin                                                                    6,464                                                   6,901                                                         6,901



     Barnett Shale                                                                                                                                                          1,452                           1,452


      Marcellus Shale                                                                   1,283                                                   1,283                                                         1,283



                   Total MVC shortfall
                    payment adjustments                            $
           
               8,661                                        $
      
          9,098                 $
     
         3,533                 $
     
         12,631





                   Total (1)                                      $
           
               12,051                                       $
      
          12,488                 $
     
         3,533                 $
     
         16,021


              __________


               (1) Exclusive of Ohio Gathering
                due to equity method accounting.


                                                                        Six months ended June
                 
     30, 2019



                                                     MVC Billings                                                     Gathering                 Adjustments               Net impact

                                                                                                                       revenue                     to MVC                 to adjusted

                                                                                                                                                 shortfall                   EBITDA

                                                                                                                                                  payments



                                                                      
             
                (In thousands)


                   Net change in deferred
                    revenue related to MVC

                                           shortfall
                            payments:



     Piceance Basin                                                        $
              6,715                                         $
      6,715                 
     $                           $
      6,715



                   Total net change                                $
          
                6,715                                    $
      
        6,715             
     
       $                      $
      
        6,715





                   MVC shortfall payment
                    adjustments:


      Williston Basin                                                       $
              1,735                                         $
      9,364                        $
           (3,468)       $
      5,896



     Piceance Basin                                                                   13,643                                            14,624                                   (103)          14,521



     Barnett Shale                                                                                                                                                             2,905            2,905


      Marcellus Shale                                                                   2,505                                             2,505                                                   2,505



                   Total MVC shortfall
                    payment adjustments                           $
          
                17,883                                   $
      
        26,493                     $
      
             (666) $
      
        25,827





                   Total (1)                                      $
          
                24,598                                   $
      
        33,208                     $
      
             (666) $
      
        32,542


              __________


               (1) Exclusive of Ohio Gathering
                due to equity method accounting.

Capital Expenditures
Capital expenditures totaled $50.2 million in the second quarter of 2019, including maintenance capital expenditures of $3.7 million. Development activities during the second quarter of 2019 were primarily related to our 60 MMcf/d DJ Basin processing plant, the Double E project, and the Blue Quail Compressor Station that serves Lane G&P.


                                Six months ended June
                                    
                30,



                                                 2019              2018



                                    (In thousands)


                  Cash
                   paid
                   for
                   capital
                   expenditures
                   (1):


     Utica
      Shale                                             $
       1,065       $
      1,846


      Williston
      Basin                                                 14,230          10,966


     DJ
      Basin                                                 50,373          21,415


      Permian
      Basin                                                 28,163          50,773


      Piceance
      Basin                                                  1,497           3,412


      Barnett
      Shale
      (2)                                                    (37)            349


      Marcellus
      Shale                                                    108             545



     Total
      reportable
      segment
      capital
      expenditures                                          95,399          89,306


      Corporate
      and
      Other
      (3)                                                  15,693           1,088



     Total
      cash
      paid
      for
      capital
      expenditures                                    $
       111,092      $
      90,394


              __________


               (1)  Excludes cash paid for capital
                expenditures by Ohio Gathering due to
                equity method accounting.


               (2)  For the six months ended June 30,
                2019, the amount includes sales tax
                reimbursements of $1.1 million.


               (3)  For 2019 and through the formation
                date of the Double E joint venture,
                reflects 100% of the capital
                expenditures associated with Double E
                and excludes capital contributions
                made by our JV partner.

Capital & Liquidity
As of June 30, 2019, SMLP had $668 million of available borrowing capacity under its $1.25 billion revolving credit facility, subject to covenant limits. Based upon the terms of SMLP's revolving credit facility and total outstanding debt of $1.37 billion (inclusive of $800.0 million of senior unsecured notes), SMLP's total leverage ratio and senior secured leverage ratio (as defined in the credit agreement) as of June 30, 2019, were 4.84 to 1.0 and 2.02 to 1.0, respectively.

In the second quarter of 2019, and in connection with its decision to proceed with Double E, SMLP and its lenders amended the credit agreement for its revolving credit facility to provide additional flexibility with respect to its financial performance metrics during the construction of the project.

Deferred Purchase Price Obligation
The consideration for the 2016 Drop Down consisted of an initial cash payment on March 3, 2016, and the Deferred Purchase Price Obligation ("DPPO"), which will be satisfied no later than December 31, 2020. At the discretion of the board of directors of SMLP's general partner, the DPPO can be made in either cash or SMLP common units, or a combination thereof.

In the first quarter of 2019, the Contribution Agreement associated with the 2016 Drop Down was amended to incorporate (i) a $100.0 million prepayment of the DPPO, which was paid in the second quarter of 2019 and (ii) an agreement to fix the remaining obligation due in 2020 at $303.5 million.

Quarterly Distribution
On July 25, 2019, the board of directors of SMLP's general partner declared a quarterly cash distribution of $0.2875 per unit on all of its outstanding common units, or $1.15 per unit on an annualized basis, for the quarter ended June 30, 2019. This distribution will be paid on August 14, 2019, to unitholders of record as of the close of business on August 7, 2019.

Second Quarter 2019 Earnings Call Information
SMLP will host a conference call at 10:00 a.m. Eastern on Friday, August 9, 2019, to discuss its quarterly operating and financial results. Interested parties may participate in the call by dialing 847-585-4405 or toll-free 888-771-4371 and entering the passcode 48729287. 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 August 23, 2019, at 11:59 p.m. Eastern, and can be accessed by dialing 888-843-7419 and entering the replay passcode 48729287#. An archive of the conference call will also be available on SMLP's website.

Upcoming Investor Conferences
Members of SMLP's senior management team will attend the 2019 Citi One-on-One Midstream / Energy Infrastructure Conference in Las Vegas, Nevada on August 14-15, 2019. The presentation materials associated with this event will be accessible through the Investors section of SMLP's website at www.summitmidstream.com prior to the beginning of the conference.

Use of Non-GAAP Financial Measures
We report financial results in accordance with U.S. generally accepted accounting principles ("GAAP"). We also present adjusted EBITDA and distributable cash flow, each a non-GAAP financial measure. We define adjusted EBITDA as net income or loss, plus interest expense, income tax expense, depreciation and amortization, our proportional adjusted EBITDA for equity method investees, adjustments related to MVC shortfall payments, adjustments related to capital reimbursement activity, unit-based and noncash compensation, the change in the Deferred Purchase Price Obligation fair value, impairments, items of income or loss that we characterize as unrepresentative of our ongoing operations and other noncash expenses or losses, less interest income, income tax benefit, income (loss) from equity method investees and other noncash income or gains. We define distributable cash flow as adjusted EBITDA plus cash interest received and cash taxes received, less cash interest paid, senior notes interest adjustment, distributions to Series A Preferred unitholders, Series A Preferred units distribution adjustment, cash taxes paid and maintenance capital expenditures. Because adjusted EBITDA and distributable cash flow may be defined differently by other entities in our industry, our definitions of these non-GAAP financial measures may not be comparable to similarly titled measures of other entities, thereby diminishing their utility.

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 external users of our financial statements, such as investors, commercial banks, research analysts and others, with additional meaningful comparisons between current results and results of prior periods as they are expected to be reflective of our core ongoing business.

Adjusted EBITDA and distributable cash flow are used as supplemental financial measures by external users of our financial statements such as investors, commercial banks, research analysts and others.

Adjusted EBITDA is used to assess:

    --  the ability of our assets to generate cash sufficient to make cash
        distributions and support our indebtedness;
    --  the financial performance of our assets without regard to financing
        methods, capital structure or historical cost basis;
    --  our operating performance and return on capital as compared to those of
        other entities in the midstream energy sector, without regard to
        financing or capital structure;
    --  the attractiveness of capital projects and acquisitions and the overall
        rates of return on alternative investment opportunities; and
    --  the financial performance of our assets without regard to (i) income or
        loss from equity method investees, (ii) the impact of the timing of
        minimum volume commitments shortfall payments under our gathering
        agreements or (iii) the timing of impairments or other income or expense
        items that we characterize as unrepresentative of our ongoing
        operations.

Distributable cash flow is used to assess:

    --  the ability of our assets to generate cash sufficient to make future
        cash distributions and
    --  the attractiveness of capital projects and acquisitions and the overall
        rates of return on alternative investment opportunities.

Both of these measures have limitations as analytical tools and investors should not consider them in isolation or as a substitute for analysis of our results as reported under GAAP. For example:

    --  certain items excluded from adjusted EBITDA and distributable cash flow
        are significant components in understanding and assessing an entity's
        financial performance, such as an entity's cost of capital and tax
        structure;
    --  adjusted EBITDA and distributable cash flow do not reflect our cash
        expenditures or future requirements for capital expenditures or
        contractual commitments;
    --  adjusted EBITDA and distributable cash flow do not reflect changes in,
        or cash requirements for, our working capital needs; and
    --  although depreciation and amortization are noncash charges, the assets
        being depreciated and amortized will often have to be replaced in the
        future, and adjusted EBITDA and distributable cash flow do not reflect
        any cash requirements for such replacements.

We compensate for the limitations of adjusted EBITDA and distributable cash flow as analytical tools by reviewing the comparable GAAP financial measures, understanding the differences between the financial measures and incorporating these data points into our decision-making process. Reconciliations of GAAP to non-GAAP financial measures are attached to this press release.

We do not provide the GAAP financial measures of net income or loss or net cash provided by operating activities on a forward-looking basis because we are unable to predict, without unreasonable effort, certain components thereof including, but not limited to, (i) income or loss from equity method investees and (ii) asset impairments. These items are inherently uncertain and depend on various factors, many of which are beyond our control. As such, any associated estimate and its impact on our GAAP performance and cash flow measures could vary materially based on a variety of acceptable management assumptions.

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 the continental United States. SMLP provides natural gas, crude oil and produced water gathering services pursuant to primarily long-term and fee-based gathering and processing agreements with customers and counterparties in six unconventional resource basins: (i) the Appalachian Basin, which includes the Utica and Marcellus shale formations in Ohio and West Virginia; (ii) the Williston Basin, which includes the Bakken and Three Forks shale formations in North Dakota; (iii) the Denver-Julesburg Basin, which includes the Niobrara and Codell shale formations in Colorado and Wyoming; (iv) the Permian Basin, which includes the Bone Spring and Wolfcamp formations in New Mexico; (v) the Fort Worth Basin, which includes the Barnett Shale formation in Texas; and (vi) the Piceance Basin, which includes the Mesaverde formation as well as the Mancos and Niobrara shale formations in Colorado and Utah. SMLP has an equity investment in and operates Double E Pipeline, LLC, which is developing natural gas transmission infrastructure that will provide transportation service from multiple receipt points in the Delaware Basin to various delivery points in and around the Waha Hub in Texas. SMLP also has an equity investment in Ohio Gathering, which operates extensive natural gas gathering and condensate stabilization infrastructure in the Utica Shale in Ohio. SMLP is headquartered in The Woodlands, Texas.

About Summit Midstream Partners, LLC
Summit Midstream Partners, LLC ("Summit Investments") beneficially owns a 41.8% limited partner interest in SMLP and indirectly owns and controls the non-economic general partner of SMLP, Summit Midstream GP, LLC, which has sole responsibility for conducting the business and managing the operations of SMLP. Summit Investments is a privately held company controlled by Energy Capital Partners II, LLC, and certain of its affiliates. An affiliate of Energy Capital Partners II, LLC directly owns a 7.2% limited partner interest in SMLP.

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 2018 Annual Report on Form 10-K filed with the Securities and Exchange Commission on February 26, 2019, and as amended and updated from time to time. Any forward-looking statements in this press release, including forward-looking statements regarding 2019 financial guidance or financial or operating expectations for 2019, 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




                                                    June                                                          December

                                                            30,                                                             31,
                                                           2019                                                            2018





                                               (In thousands)



     
                Assets


                   Current assets:


      Cash and cash equivalents                                               $
              535                                       $
         4,345



     Accounts receivable                                                              84,125                                             97,936


      Other current assets                                                              2,011                                              3,971



        Total current assets                                                           86,671                                            106,252


      Property, plant and equipment,
       net                                                                          1,878,851                                          1,963,713


      Intangible assets, net                                                          251,250                                            273,416



     Goodwill                                                                         16,211                                             16,211


      Investment in equity method
       investees                                                                      653,807                                            649,250


      Other noncurrent assets                                                          10,912                                             11,720




       Total assets                                                    $
              2,897,702                                   $
         3,020,562





                   Liabilities and Partners'
                    Capital


                   Current liabilities:


      Trade accounts payable                                               $
              25,252                                      $
         38,414



     Accrued expenses                                                                  8,759                                             21,963



     Due to affiliate                                                                    387                                                240



     Deferred revenue                                                                 12,325                                             11,467


      Ad valorem taxes payable                                                          6,737                                             10,550



     Accrued interest                                                                 12,381                                             12,286


      Accrued environmental
       remediation                                                                      2,561                                              2,487


      Other current liabilities                                                        11,949                                             12,645


      Deferred Purchase Price
       Obligation                                                                     292,073



        Total current liabilities                                                     372,424                                            110,052



     Long-term debt                                                                1,365,564                                          1,257,731


      Noncurrent Deferred Purchase
       Price Obligation                                                                                                                 383,934


      Noncurrent deferred revenue                                                      40,201                                             39,504


      Noncurrent accrued
       environmental remediation                                                        2,841                                              3,149


      Other noncurrent liabilities                                                      9,557                                              4,968




       Total liabilities                                                           1,790,587                                          1,799,338




      Series A Preferred Units                                                        293,616                                            293,616


      Common limited partner capital                                                  813,499                                            902,358


      General Partner interests                                                                                                          25,250



        Total partners' capital                                                     1,107,115                                          1,221,224



        Total liabilities and
         partners' capital                                              $
              2,897,702                                   $
         3,020,562


                                                                               
              
                SUMMIT MIDSTREAM PARTNERS, LP AND SUBSIDIARIES

                                                                          
              
                UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS




                                                                Three                                                     Six months ended June
                                                                months                                                     
                30,
                                                              ended June
                                                                  30,



                                                 2019                                      2018                                                 2019                    2018



                                               
          
         (In thousands, except per-unit amounts)


                   Revenues:


      Gathering services and
       related fees                                     $
            75,107                                             $
              89,585                       $
        162,071     $
         173,946


      Natural gas, NGLs and
       condensate sales                                           18,291                                                         31,891                              56,219             58,008



     Other revenues                                               6,288                                                          6,707                              12,804             13,549




     Total revenues                                              99,686                                                        128,183                             231,094            245,503



                   Costs and expenses:


      Cost of natural gas and
       NGLs                                                       11,571                                                         24,384                              43,330             44,670


      Operation and maintenance                                   23,718                                                         24,466                              47,940             49,070


      General and administrative                                  10,214                                                         13,484                              27,495             27,926


      Depreciation and
       amortization                                               26,800                                                         26,784                              54,527             53,461


      Transaction costs                                                                                                                                               950


      (Gain) loss on asset sales,
       net                                                         (287)                                                            62                             (1,248)              (12)


      Long-lived asset
       impairment (1)                                                 70                                                            587                              45,021                587



      Total costs and expenses                                    72,086                                                         89,767                             218,015            175,702




     Other income                                                    83                                                             27                                 292                 20



     Interest expense                                          (17,941)                                                      (14,837)                           (35,468)          (29,959)


      Deferred Purchase Price
       Obligation                                                (3,712)                                                      (69,305)                            (8,139)          (90,963)



      Income (loss) before income
       taxes and 
              loss
       from equity method
       investees                                                   6,030                                                       (45,699)                           (30,236)          (51,101)


      Income tax expense                                         (1,142)                                                         (294)                            (1,349)             (123)


      Loss from equity method
       investees                                                    (79)                                                       (3,920)                              (520)           (2,534)



      Net income (loss)                                  $
            4,809                                           $
              (49,913)                     $
        (32,105)   $
         (53,758)





                   Loss per limited partner
                    unit:


      Common unit - basic                               $
            (0.03)                                            $
              (0.79)                       $
        (0.58)     $
         (0.97)


      Common unit - diluted                             $
            (0.03)                                            $
              (0.79)                       $
        (0.58)     $
         (0.97)




                   Weighted-average limited
                    partner units outstanding:


      Common units - basic                                        82,700                                                         73,356                              79,266             73,245


      Common units - diluted                                      82,700                                                         73,356                              79,266             73,245


              __________


               (1) For the six months ended June
                30, 2019, the amount is associated
                with our decision to idle our
                existing 20 MMcf/d DJ Basin
                processing plant in conjunction
                with the commissioning of our new
                60 MMcf/d DJ Basin processing
                plant, and to decommission an
                underutilized Barnett Shale
                compressor station.


                                                                  
           
         SUMMIT MIDSTREAM PARTNERS, LP AND SUBSIDIARIES

                                                                   
           
         UNAUDITED OTHER FINANCIAL AND OPERATING DATA




                                                          Three                                                        Six months ended June
                                                          months                                                           
                30,
                                                         ended June
                                                                30,



                                          2019                                  2018                                                    2019             2018



                                                   (Dollars in thousands)


                  Other financial data:


     Net income (loss)                          $
             4,809                                    $
              (49,913)                     $
        (32,105)   $
         (53,758)


     Net cash provided
      by operating
      activities                               $
             43,535                                      $
              58,839                        $
        96,246     $
         110,049


     Capital
      expenditures                             $
             50,244                                      $
              49,616                       $
        111,092      $
         90,394


     Adjusted EBITDA                           $
             68,608                                      $
              73,495                       $
        137,577     $
         143,804


     Distributable
      cash flow                                $
             38,408                                      $
              47,161                        $
        78,635      $
         91,312


     Distributions
      declared (1)                             $
             23,778                                      $
              45,216                        $
        47,553      $
         90,432


     Distribution
      coverage ratio
      (2)                               1.62x                                1.04x                                                  1.65x           1.01x




                  Operating data:


     Aggregate average daily
      throughput - natural gas
              (MMcf/d)                                   1,368                                                   1,797                               1,419              1,767


     Aggregate average daily
      throughput - liquids (Mbbl/
      d)                                                  94.3                                                    88.9                                98.6               86.9




     Ohio Gathering average daily
      throughput (MMcf/d) (3)                              713                                                     727                                 712                749


              __________


               (1) Represents distributions
                declared to common unitholders
                in respect of a given period.
                For example, for the three
                months ended June 30, 2019,
                represents the distributions
                declared in July 2019 to be
                paid in August 2019.


               (2) Distribution coverage ratio
                calculation for the three
                months ended June 30, 2019 and
                2018 is based on distributions
                declared to common unitholders
                in respect of the second
                quarter of 2019 and 2018.
                Represents the ratio of
                distributable cash flow to
                distributions declared.


               (3) Gross basis, represents 100%
                of volume throughput for Ohio
                Gathering, subject to a one-
                month lag.


                                                                   
           
                SUMMIT MIDSTREAM PARTNERS, LP AND SUBSIDIARIES
                                                                 
            UNAUDITED RECONCILIATION OF REPORTABLE SEGMENT ADJUSTED EBITDA
                                                                                   
                TO ADJUSTED EBITDA




                                                      Three                                         Six months ended June
                                                      months                                         
                30,
                                                    ended June
                                                          30,



                                         2019                        2018                                             2019                         2018



                                                  (In thousands)


                   Reportable segment
                    adjusted EBITDA (1):



     Utica Shale                              $
           6,640                                 $
              9,223                           $
        12,833   $
      17,938


      Ohio Gathering (2)                                9,939                                             8,935                                 19,149       19,412


      Williston Basin                                  16,650                                            19,030                                 35,384       35,000



     DJ Basin                                          2,816                                               959                                  5,489        2,280



     Permian Basin                                     (656)                                                                                (1,206)


      Piceance Basin                                   24,584                                            26,714                                 50,583       54,628



     Barnett Shale                                    11,208                                            11,093                                 22,582       20,952


      Marcellus Shale                                   4,635                                             6,543                                  9,777       13,219




     Total                                   $
           75,816                                $
              82,497                          $
        154,591  $
      163,429


      Less Corporate and Other
       (3)                                             7,208                                             9,002                                 17,014       19,625



      Adjusted EBITDA                         $
           68,608                                $
              73,495                          $
        137,577  $
      143,804


              __________


               (1) We define segment adjusted EBITDA as
                total revenues less total costs and
                expenses; plus (i) other income
                excluding interest income, (ii) our
                proportional adjusted EBITDA for equity
                method investees, (iii) depreciation
                and amortization, (iv) adjustments
                related to MVC shortfall payments, (v)
                unit-based and noncash compensation,
                (vi) change in the Deferred Purchase
                Price Obligation, (vii) impairments and
                (viii) other noncash expenses or
                losses, less other noncash income or
                gains.


               (2) Represents our proportional share of
                adjusted EBITDA for Ohio Gathering,
                subject to a one-month lag.  We define
                proportional adjusted EBITDA for our
                equity method investees as the product
                of (i) total revenues less total
                expenses, excluding impairments and
                other noncash income or expense items
                and (ii) amortization for deferred
                contract costs; multiplied by our
                ownership interest in Ohio Gathering
                during the respective period.


               (3) Corporate and Other represents those
                results that are not specifically
                attributable to a reportable segment
                (such as Double E) or that have not
                been allocated to our reportable
                segments, including certain general and
                administrative expense items, natural
                gas and crude oil marketing services,
                interest expense and a change in the
                Deferred Purchase Price Obligation.


                                                                              
      
               SUMMIT MIDSTREAM PARTNERS, LP AND SUBSIDIARIES
                                                                               
       UNAUDITED RECONCILIATIONS TO NON-GAAP FINANCIAL MEASURES




                                                                  Three                                                 Six months ended June
                                                                  months                                                 
                30,
                                                               ended June
                                                                     30,



                                                      2019                                  2018                                                 2019             2018



                                                            (In thousands)


                   Reconciliations of net income or
                    loss to adjusted

                       EBITDA and distributable cash
                        flow:



     Net income (loss)                                     $
              4,809                                      $
              (49,913)               $
        (32,105)   $
         (53,758)



     
                Add:



     Interest expense                                                 17,941                                                    14,837                        35,468             29,959



     Income tax expense                                                1,142                                                       294                         1,349                123


      Depreciation and amortization (1)                                27,163                                                    26,634                        55,279             53,160


      Proportional adjusted EBITDA for
       equity method
       investees (2)                                                    9,939                                                     8,935                        19,149             19,412


      Adjustments related to MVC
       shortfall payments (3)                                           3,533                                                   (3,542)                        (666)           (3,542)


      Adjustments related to capital
       reimbursement activity (4)                                     (1,046)                                                      115                       (1,761)               155


      Unit-based and noncash
       compensation                                                     1,553                                                     2,261                         4,079              4,223


      Deferred Purchase Price
       Obligation (5)                                                   3,712                                                    69,305                         8,139             90,963


      (Gain) loss on asset sales, net                                   (287)                                                       62                       (1,248)              (12)


      Long-lived asset impairment                                          70                                                       587                        45,021                587



     Other, net (6)                                                                                                                                          4,353



     
                Less:


      Loss from equity method investees                                  (79)                                                  (3,920)                        (520)           (2,534)




     Adjusted EBITDA                                      $
              68,608                                        $
              73,495                 $
        137,577     $
         143,804




     
                Less:



     Cash interest paid                                               22,277                                                    18,755                        37,506             30,962



     Cash paid for taxes                                                 150                                                       175                           150                175


      Senior notes interest adjustment
       (7)                                                           (3,063)                                                  (3,063)


      Distributions to Series A
       Preferred unitholders (8)                                       14,250                                                    14,250                        14,250             14,250


      Series A Preferred units
       distribution adjustment (9)                                    (7,125)                                                  (7,125)


      Maintenance capital expenditures                                  3,711                                                     3,342                         7,036              7,105



      Distributable cash flow                              $
              38,408                                        $
              47,161                  $
        78,635      $
         91,312





      Distributions declared (10)                          $
              23,778                                        $
              45,216                  $
        47,553      $
         90,432





      Distribution coverage ratio (11)               1.62x                                1.04x                                               1.65x           1.01x


              __________


               (1) Includes the amortization expense
                associated with our favorable and
                unfavorable gas gathering contracts as
                reported in other revenues.


               (2) Reflects our proportionate share of
                Ohio Gathering adjusted EBITDA, subject
                to a one-month lag.


               (3) Adjustments related to MVC shortfall
                payments recognize the earnings from
                MVC shortfall payments ratably over the
                term of the associated MVC.


               (4) Adjustments related to capital
                reimbursement activity represent
                contributions in aid of construction
                revenue recognized in accordance with
                Accounting Standards Update No. 2014-09
                Revenue from Contracts with Customers
                ("Topic 606").


               (5) Deferred Purchase Price Obligation
                represents the change in the present
                value of the Deferred Purchase Price
                Obligation.


               (6) Represents items of income or loss
                that we characterize as
                unrepresentative of our ongoing
                operations, including, in the six
                months ended June 30, 2019, $3.4
                million of severance expense associated
                with our former Chief Executive Officer
                and $0.9 million of transaction costs
                associated with the Equity
                Restructuring we completed during the
                quarter.


               (7) Senior notes interest adjustment
                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 $500.0 million
                5.75% senior notes is paid in cash
                semi-annually in arrears on April 15
                and October 15 until maturity in April
                2025.


               (8) Distributions on the Series A
                preferred units are paid in cash semi-
                annually in arrears on June 15 and
                December 15 each year, through and
                including December 15, 2022, and,
                thereafter, quarterly in arrears on the
                15th day of March, June, September and
                December of each year.


               (9) Series A Preferred unit distribution
                adjustment represents the net of
                distributions paid and accrued on the
                Series A Preferred units. Distributions
                on the Series A preferred units are
                paid in cash semi-annually in arrears
                on June 15 and December 15 each year,
                through and including December 15,
                2022, and, thereafter, quarterly in
                arrears on the 15th day of March, June,
                September and December of each year.


               (10) Represents distributions declared
                to common unitholders in respect of a
                given period. For example, for the
                three months ended June 30, 2019,
                represents the distributions declared
                in July 2019 to be paid in August 2019.


               (11) Distribution coverage ratio
                calculation for the three months ended
                June 30, 2019 and 2018 is based on
                distributions declared in respect of
                the second quarter of 2019 and 2018.
                Represents the ratio of distributable
                cash flow to distributions declared.


                                                     
     
                SUMMIT MIDSTREAM PARTNERS, LP AND SUBSIDIARIES
                                                     
       UNAUDITED RECONCILIATIONS TO NON-GAAP FINANCIAL MEASURES




                                                                   Six months ended June
                                                                      
                30,



                                                                                    2019                            2018



                                                                       (In thousands)


                   Reconciliation of net cash
                    provided by operating activities
                    to adjusted

                       EBITDA and distributable cash
                        flow:


      Net cash provided by operating
       activities                                                                                $
              96,246      $
       110,049



     
                Add:


      Interest expense, excluding
       amortization of debt issuance
       costs                                                                                                 33,293            27,873



     Income tax expense                                                                                      1,349               123


      Changes in operating assets and
       liabilities                                                                                            5,361             6,858


      Proportional adjusted EBITDA for
       equity method investees (1)                                                                           19,149            19,412


      Adjustments related to MVC
       shortfall payments (2)                                                                                 (666)          (3,542)


      Adjustments related to capital
       reimbursement activity (3)                                                                           (1,761)              155



     Other, net (4)                                                                                          4,353



     
                Less:


      Distributions from equity method
       investees                                                                                             18,217            17,124



     Noncash lease expense                                                                                   1,530




     Adjusted EBITDA                                                                           $
              137,577      $
       143,804




     
                Less:



     Cash interest paid                                                                                     37,506            30,962



     Cash paid for taxes                                                                                       150               175


      Senior notes interest adjustment
       (5)


      Distributions to Series A
       Preferred unitholders (6)                                                                             14,250            14,250


      Series A Preferred units
       distribution adjustment (7)


      Maintenance capital expenditures                                                                        7,036             7,105



      Distributable cash flow                                                                    $
              78,635       $
       91,312


              __________


               (1) Reflects our proportionate share of
                Ohio Gathering adjusted EBITDA, subject
                to a one-month lag.


               (2) Adjustments related to MVC shortfall
                payments are recognized in gathering
                services and related fees.


               (3) Adjustments related to capital
                reimbursement activity represent
                contributions in aid of construction
                revenue recognized in accordance with
                Accounting Standards Update No. 2014-09
                Revenue from Contracts with Customers
                ("Topic 606").


               (4) Represents items of income or loss
                that we characterize as
                unrepresentative of our ongoing
                operations, including, in the six
                months ended June 30, 2019, $3.4
                million of severance expense associated
                with our former Chief Executive Officer
                and $0.9 million of transaction costs
                associated with the Equity
                Restructuring transaction we completed
                during the quarter.


               (5) Senior notes interest adjustment
                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 $500.0 million
                5.75% senior notes is paid in cash
                semi-annually in arrears on April 15
                and October 15 until maturity in April
                2025.


               (6) Distributions on the Series A
                Preferred units are paid in cash semi-
                annually in arrears on June 15 and
                December 15 each year, through and
                including December 15, 2022, and,
                thereafter, quarterly in arrears on the
                15th day of March, June, September and
                December of each year.


               (7) Series A Preferred unit distribution
                adjustment represents the net of
                distributions paid and accrued on the
                Series A Preferred units. Distributions
                on the Series A Preferred units are
                paid in cash semi-annually in arrears
                on June 15 and December 15 each year,
                through and including December 15,
                2022, and, thereafter, quarterly in
                arrears on the 15th day of March, June,
                September and December of each year.

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SOURCE Summit Midstream Partners, LP