Press Release
- Fourth quarter 2016 net income of
$14.0 million and full year 2016 net loss of$38.2 million - Fourth quarter 2016 adjusted EBITDA of
$72.7 million and DCF of$52.8 million and full year 2016 adjusted EBITDA of$291.6 million and DCF of$210.9 million - Fourth quarter 2016 distribution coverage ratio was 1.19x
- 2017 adjusted EBITDA guidance of
$295.0 million to $315.0 million , with an annualized fourth quarter 2017 run rate between$325.0 million and $345.0 million - 2017 distribution coverage ratio expected to range from 1.15x to 1.25x
Natural gas volume throughput averaged 1,504 million cubic feet per day ("MMcf/d") in the fourth quarter of 2016, an increase of 7.7% compared to 1,396 MMcf/d in the prior-year period, and a decrease of 4.3% compared to 1,572 MMcf/d in the third quarter of 2016. Crude oil and produced water volume throughput in the fourth quarter of 2016 averaged 82.3 thousand barrels per day ("Mbbl/d"), a decrease of 4.5% compared to 86.2 Mbbl/d in the prior-year period, and a decrease of 10.7% compared to 92.2 Mbbl/d in the third quarter of 2016. SMLP's volume throughput metrics exclude its proportionate share of volume throughput from its 40% ownership interest in Ohio Gathering.
SMLP reported a net loss of
We continue to experience sequential quarterly volume and segment adjusted EBITDA growth on our Piceance/DJ segment, resulting from higher levels of drilling and completion activities from our customers. Recent upstream M&A activity within our Piceance and DJ basin areas of operation has led to increased drilling and completion activity that has more than offset volume declines from our anchor customer. We expect volume growth to continue in this area throughout 2017.
Our Barnett system experienced similar upstream M&A activity in 2016. Over the last 12 months, four of our five largest customers on the Barnett system, representing approximately 87% of Barnett segment volume throughput in the fourth quarter of 2016, have sold their acreage to new owners. Just as we've experienced in the Piceance/DJ segment, where three of our top six customers sold to new owners over the last several years, we expect that these new Barnett customers will implement a more active drilling, completion and workover plan throughout 2017 with a focus on growing production.
Volume throughput for the Marcellus segment decreased 10.5% relative to the third quarter of 2016 due to natural volume declines. We expect our Marcellus customer to commission over 20 DUCs in the second half of 2017, resulting in increased volume throughput in the third and fourth quarters of 2017. We are also optimistic about the long-term growth profile of our Marcellus segment, given recent announcements related to the pending expansion of the
2017 Financial Guidance Reaffirmed
SMLP is reaffirming its 2017 financial guidance, which was initially provided on
SMLP expects to incur
Mr. Newby commented, "We expect the first half of 2017 to be impacted by the slower pace of drilling activity that occurred across many of our systems in late 2016. As we look towards the second half of 2017, we expect to benefit from DUC completions and increased drilling activity that is currently taking place behind our gathering systems in the
Fourth Quarter 2016 Segment Results
Segment adjusted EBITDA for the fourth quarter of 2016 totaled
Volume throughput on the Summit Utica system averaged 211 MMcf/d in the fourth quarter of 2016 compared to 75 MMcf/d in the prior-year period and 234 MMcf/d in the third quarter of 2016. Volume throughput for the fourth quarter of 2016 increased relative to the prior-year period due to our continued buildout of the Summit Utica gathering system and our connection of 8 wells in the third quarter of 2016 and another five wells late in the fourth quarter of 2016. Volume throughput was adversely impacted during the fourth quarter of 2016 as one of our customers curtailed a portion of its volume throughput in October due to low local natural gas prices and temporarily shut-in existing production for nearby completion work on new wells. We estimate that these temporary curtailment activities impacted quarterly volume throughput by approximately 40 MMcf/d during the quarter.
The Bison Midstream, Polar and
Segment adjusted EBITDA for the
Liquids volumes averaged 82.3 Mbbl/d in the fourth quarter of 2016, a decrease of 4.5% over the prior-year period and a decrease of 10.7% compared to the third quarter of 2016. Lower liquids volumes were partially offset by producers commissioning 28 drilled but uncompleted ("DUC") wells in the third quarter of 2016. Four new wells were commissioned in the fourth quarter of 2016 and our customers remain active, with two drilling rigs currently working on acreage dedicated to our Polar and
Associated natural gas volumes decreased 32% from 25 MMcf/d in the fourth quarter of 2015 to 17 MMcf/d in the fourth quarter of 2016. Volume declines were primarily impacted by a two-week suspension of gathering activities on the Bison Midstream system due to scheduled maintenance on third-party infrastructure located downstream of the Bison Midstream system. In addition, abnormally harsh winter weather late in the fourth quarter of 2016 negatively impacted operations during the quarter.
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
Segment adjusted EBITDA totaled
The DFW Midstream system provides our midstream services for the
Segment adjusted EBITDA for the
During the fourth quarter of 2016, two of our three largest customers sold their acreage dedicated to DFW Midstream to new owners that we expect will implement more active drilling and completion activity going forward. Over the last 12 months, four of our five largest customers in the Barnett segment, representing approximately 87% of Barnett segment volume throughput in the fourth quarter of 2016, have sold their acreage to new owners. We expect to benefit from this customer turnover over the intermediate and long-term, similar to the increased volume growth we are now seeing from customer turnover across our Piceance/DJ Basins segment over the last several years.
The Mountaineer Midstream system provides our midstream services for the
Segment adjusted EBITDA for the
The following table presents average daily throughput by reportable segment:
Three months ended December 31, |
Year ended December 31, |
||||||||||
2016 |
2015 |
2016 |
2015 |
||||||||
Average daily throughput (MMcf/d): |
|||||||||||
Utica Shale (1) |
211 |
75 |
186 |
37 |
|||||||
Williston Basin (2) |
17 |
25 |
22 |
23 |
|||||||
Piceance/DJ Basins (2) |
615 |
605 |
586 |
609 |
|||||||
Barnett Shale |
287 |
325 |
319 |
352 |
|||||||
Marcellus Shale |
374 |
366 |
415 |
478 |
|||||||
Aggregate average daily throughput |
1,504 |
1,396 |
1,528 |
1,499 |
|||||||
Average daily throughput (Mbbl/d): |
|||||||||||
Williston Basin (2) |
82.3 |
86.2 |
88.9 |
67.7 |
|||||||
Aggregate average daily throughput |
82.3 |
86.2 |
88.9 |
67.7 |
|||||||
Ohio Gathering average daily throughput (MMcf/d) (3) |
848 |
839 |
865 |
645 |
__________
(1) |
Exclusive of volume throughput for Ohio Gathering. |
(2) |
Prior periods have been recast to include the incremental historical volumes from the 2016 Drop Down. |
(3) |
Gross basis, represents 100% of volume throughput for Ohio Gathering, based on a one-month lag. |
MVC Shortfall Payments
SMLP billed its customers
MVC shortfall payment adjustments in the fourth quarter of 2016 totaled
SMLP's MVC shortfall payment mechanisms contributed
Three months ended December 31, 2016 |
||||||||||||||||
MVC billings |
Gathering revenue |
Adjustments to MVC shortfall |
Net impact to adjusted |
|||||||||||||
(In thousands) |
||||||||||||||||
Net change in deferred revenue related to MVC shortfall payments: |
||||||||||||||||
Utica Shale |
$ |
— |
$ |
— |
$ |
— |
$ |
— |
||||||||
Williston Basin |
8,456 |
— |
8,456 |
8,456 |
||||||||||||
Piceance/DJ Basins |
3,897 |
3,931 |
(34) |
3,897 |
||||||||||||
Barnett Shale |
— |
— |
— |
— |
||||||||||||
Marcellus Shale |
— |
— |
— |
— |
||||||||||||
Total net change |
$ |
12,353 |
$ |
3,931 |
$ |
8,422 |
$ |
12,353 |
||||||||
MVC shortfall payment adjustments: |
||||||||||||||||
Utica Shale |
$ |
— |
$ |
— |
$ |
— |
$ |
— |
||||||||
Williston Basin |
7,536 |
7,536 |
(11,757) |
(4,221) |
||||||||||||
Piceance/DJ Basins |
26,329 |
26,329 |
(19,227) |
7,102 |
||||||||||||
Barnett Shale |
620 |
620 |
344 |
964 |
||||||||||||
Marcellus Shale |
1,095 |
1,095 |
— |
1,095 |
||||||||||||
Total MVC shortfall payment adjustments |
$ |
35,580 |
$ |
35,580 |
$ |
(30,640) |
$ |
4,940 |
||||||||
Total |
$ |
47,933 |
$ |
39,511 |
$ |
(22,218) |
$ |
17,293 |
Year ended December 31, 2016 |
||||||||||||||||
MVC billings |
Gathering revenue |
Adjustments to MVC shortfall |
Net impact to adjusted |
|||||||||||||
(In thousands) |
||||||||||||||||
Net change in deferred revenue related to MVC shortfall payments: |
||||||||||||||||
Utica Shale |
$ |
— |
$ |
— |
$ |
— |
$ |
— |
||||||||
Williston Basin |
8,691 |
— |
8,691 |
8,691 |
||||||||||||
Piceance/DJ Basins |
15,926 |
12,638 |
3,288 |
15,926 |
||||||||||||
Barnett Shale |
— |
677 |
(677) |
— |
||||||||||||
Marcellus Shale |
— |
— |
— |
— |
||||||||||||
Total net change |
$ |
24,617 |
$ |
13,315 |
$ |
11,302 |
$ |
24,617 |
||||||||
MVC shortfall payment adjustments: |
||||||||||||||||
Utica Shale |
$ |
— |
$ |
— |
$ |
— |
$ |
— |
||||||||
Williston Basin |
7,536 |
7,536 |
— |
7,536 |
||||||||||||
Piceance/DJ Basins |
27,183 |
27,183 |
(317) |
26,866 |
||||||||||||
Barnett Shale |
1,373 |
1,373 |
615 |
1,988 |
||||||||||||
Marcellus Shale |
3,895 |
3,895 |
— |
3,895 |
||||||||||||
Total MVC shortfall payment adjustments |
$ |
39,987 |
$ |
39,987 |
$ |
298 |
$ |
40,285 |
||||||||
Total |
$ |
64,604 |
$ |
53,302 |
$ |
11,600 |
$ |
64,902 |
Capital Expenditures
SMLP recorded total capital expenditures of
Capital & Liquidity
As of
Through
On
Deferred Purchase Price Obligation
The consideration for the 2016 Drop Down consisted of (i) an initial
The Deferred Payment will be equal to: (a) six-and-one-half (6.5) multiplied by the average Business Adjusted EBITDA of the 2016 Drop Down Assets for 2018 and 2019; less (b) the Initial Payment; less (c) all capital expenditures incurred for the 2016 Drop Down Assets between March 3, 2016 and December 31, 2019; plus (d) all Business Adjusted EBITDA from the 2016 Drop Down Assets between March 3, 2016 and December 31, 2019. SMLP currently estimates that the Deferred Payment will be approximately $800.0 million to $900.0 million.
Quarterly Distribution
On
Fourth Quarter 2016 Earnings Call Information
SMLP will host a conference call at
A replay of the conference call will be available until
Upcoming Investor Conferences
Members of SMLP's senior management team will participate in the Barclays Select Series: MLP Corporate Access Day which is being held in
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, unit-based and noncash compensation, Deferred Purchase Price Obligation expense, impairments 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, 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 noncash income or expense items.
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, (ii) deferred purchase price obligation income or expense and (iii) 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.
Comparability Related to Drop Down Transactions
With respect to drop down transactions, SMLP's historical results of operations may not be comparable to its future results of operations. In
About
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
About
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 2015 Annual Report on Form 10-K as updated and superseded by the Current Report on Form 8-K/A filed with the
SUMMIT MIDSTREAM PARTNERS, LP AND SUBSIDIARIES |
|||||||
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS |
|||||||
December 31, |
|||||||
2016 |
2015 |
||||||
(In thousands) |
|||||||
Assets |
|||||||
Current assets: |
|||||||
Cash and cash equivalents |
$ |
7,428 |
$ |
21,793 |
|||
Accounts receivable |
97,364 |
89,581 |
|||||
Other current assets |
4,309 |
3,573 |
|||||
Total current assets |
109,101 |
114,947 |
|||||
Property, plant and equipment, net |
1,853,671 |
1,812,783 |
|||||
Intangible assets, net |
421,452 |
461,310 |
|||||
Goodwill |
16,211 |
16,211 |
|||||
Investment in equity method investees |
707,415 |
751,168 |
|||||
Other noncurrent assets |
7,329 |
8,253 |
|||||
Total assets |
$ |
3,115,179 |
$ |
3,164,672 |
|||
Liabilities and Partners' Capital |
|||||||
Current liabilities: |
|||||||
Trade accounts payable |
$ |
16,251 |
$ |
40,808 |
|||
Accrued expenses |
11,389 |
6,776 |
|||||
Due to affiliate |
258 |
1,149 |
|||||
Deferred revenue |
— |
677 |
|||||
Ad valorem taxes payable |
10,588 |
10,271 |
|||||
Accrued interest |
17,483 |
17,483 |
|||||
Accrued environmental remediation |
4,301 |
7,900 |
|||||
Other current liabilities |
11,471 |
6,521 |
|||||
Total current liabilities |
71,741 |
91,585 |
|||||
Long-term debt |
1,240,301 |
1,267,270 |
|||||
Deferred Purchase Price Obligation |
563,281 |
— |
|||||
Deferred revenue |
57,465 |
45,486 |
|||||
Noncurrent accrued environmental remediation |
5,152 |
5,764 |
|||||
Other noncurrent liabilities |
7,566 |
7,268 |
|||||
Total liabilities |
1,945,506 |
1,417,373 |
|||||
Common limited partner capital |
1,129,132 |
744,977 |
|||||
Subordinated limited partner capital (1) |
— |
213,631 |
|||||
General partner interests |
29,294 |
25,634 |
|||||
Noncontrolling interest |
11,247 |
— |
|||||
Summit Investments' equity in contributed subsidiaries |
— |
763,057 |
|||||
Total partners' capital |
1,169,673 |
1,747,299 |
|||||
Total liabilities and partners' capital |
$ |
3,115,179 |
$ |
3,164,672 |
__________
(1) The subordination period ended on February 16, 2016 and all 24,409,850 subordinated units converted to common units on a one-for-one basis. |
SUMMIT MIDSTREAM PARTNERS, LP AND SUBSIDIARIES |
|||||||||||||||
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS |
|||||||||||||||
Three months ended December 31, |
Year ended December 31, |
||||||||||||||
2016 |
2015 |
2016 |
2015 |
||||||||||||
(In thousands, except per-unit amounts) |
|||||||||||||||
Revenues: |
|||||||||||||||
Gathering services and related fees |
$ |
111,378 |
$ |
98,051 |
$ |
345,961 |
$ |
337,819 |
|||||||
Natural gas, NGLs and condensate sales |
10,086 |
8,789 |
35,833 |
42,079 |
|||||||||||
Other revenues |
5,619 |
5,575 |
20,568 |
20,659 |
|||||||||||
Total revenues |
127,083 |
112,415 |
402,362 |
400,557 |
|||||||||||
Costs and expenses: |
|||||||||||||||
Cost of natural gas and NGLs |
7,281 |
6,424 |
27,421 |
31,398 |
|||||||||||
Operation and maintenance |
23,023 |
23,942 |
95,334 |
94,986 |
|||||||||||
General and administrative |
14,287 |
11,048 |
52,410 |
45,108 |
|||||||||||
Depreciation and amortization |
28,569 |
27,172 |
112,239 |
105,117 |
|||||||||||
Transaction costs |
25 |
88 |
1,321 |
1,342 |
|||||||||||
Environmental remediation |
— |
1,800 |
— |
21,800 |
|||||||||||
Loss (gain) on asset sales, net |
69 |
42 |
93 |
(172) |
|||||||||||
Long-lived asset impairment |
23 |
1,609 |
1,764 |
9,305 |
|||||||||||
Goodwill impairment |
— |
248,851 |
— |
248,851 |
|||||||||||
Total costs and expenses |
73,277 |
320,976 |
290,582 |
557,735 |
|||||||||||
Other income |
24 |
— |
116 |
2 |
|||||||||||
Interest expense |
(16,160) |
(14,229) |
(63,810) |
(59,092) |
|||||||||||
Deferred Purchase Price Obligation expense |
(24,738) |
— |
(55,854) |
— |
|||||||||||
Income (loss) before income taxes and income (loss) from equity method investees |
12,932 |
(222,790) |
(7,768) |
(216,268) |
|||||||||||
Income tax benefit (expense) |
66 |
969 |
(75) |
603 |
|||||||||||
Income (loss) from equity method investees |
997 |
931 |
(30,344) |
(6,563) |
|||||||||||
Net income (loss) |
$ |
13,995 |
$ |
(220,890) |
$ |
(38,187) |
$ |
(222,228) |
|||||||
Earnings (loss) per limited partner unit: |
|||||||||||||||
Common unit – basic and diluted |
$ |
0.16 |
$ |
(3.28) |
$ |
(0.71) |
$ |
(3.20) |
|||||||
Subordinated unit – basic and diluted (1) |
$ |
(3.28) |
$ |
(2.88) |
|||||||||||
Weighted-average limited partner units outstanding: |
|||||||||||||||
Common units – basic and diluted |
72,096 |
42,063 |
68,264 |
39,217 |
|||||||||||
Subordinated units – basic and diluted (1) |
24,410 |
24,410 |
__________
(1) The subordination period ended on February 16, 2016 and all 24,409,850 subordinated units converted to common units on a one-for-one basis. |
SUMMIT MIDSTREAM PARTNERS, LP AND SUBSIDIARIES |
|||||||||||||||
OTHER FINANCIAL AND OPERATING DATA |
|||||||||||||||
Three months ended December 31, |
Year ended December 31, |
||||||||||||||
2016 |
2015 |
2016 |
2015 |
||||||||||||
(Dollars in thousands) |
|||||||||||||||
Other financial data: |
|||||||||||||||
Net income (loss) |
$ |
13,995 |
$ |
(220,890) |
$ |
(38,187) |
$ |
(222,228) |
|||||||
Net cash provided by operating activities |
$ |
61,790 |
$ |
53,278 |
$ |
230,495 |
$ |
191,375 |
|||||||
Capital expenditures |
$ |
19,984 |
$ |
66,796 |
$ |
142,719 |
$ |
272,225 |
|||||||
Contributions to equity method investees |
$ |
11,425 |
$ |
11,825 |
$ |
31,582 |
$ |
86,200 |
|||||||
Acquisitions of gathering systems (1) |
$ |
— |
$ |
— |
$ |
866,858 |
$ |
288,618 |
|||||||
Adjusted EBITDA |
$ |
72,721 |
$ |
68,532 |
$ |
291,601 |
$ |
235,491 |
|||||||
Distributable cash flow |
$ |
52,802 |
$ |
50,748 |
$ |
210,906 |
$ |
164,931 |
|||||||
Distributions declared (2) |
$ |
44,452 |
$ |
40,977 |
$ |
170,981 |
$ |
157,960 |
|||||||
Distribution coverage ratio (3) |
1.19x |
* |
* |
* |
|||||||||||
Operating data: |
|||||||||||||||
Aggregate average daily throughput – natural gas (MMcf/d) |
1,504 |
1,396 |
1,528 |
1,499 |
|||||||||||
Aggregate average daily throughput – liquids (Mbbl/d) |
82.3 |
86.2 |
88.9 |
67.7 |
|||||||||||
Ohio Gathering average daily throughput (MMcf/d) (4) |
848 |
839 |
865 |
645 |
__________
* Not considered meaningful |
(1) Reflects cash and noncash consideration, including working capital and capital expenditure adjustments paid (received), for acquisitions and/or drop downs |
(2) Represents distributions declared in respect of a given period. For example, for the year ended December 31, 2016, represents the distributions paid in May 2016 for the first quarter of 2016, August 2016 for the second quarter of 2016, November 2016 for the third quarter of 2016, and February 2017 for the fourth quarter of 2016. |
(3) Distribution coverage ratio calculation for the three months ended December 31, 2016 is based on distributions declared in respect of the fourth quarter of 2016. Represents the ratio of distributable cash flow to distributions declared. Due to the common control nature of drop down transactions and to the extent that common control existed during a given reporting period, our results are reported on an as-if pooled basis with no adjustment to past distributions declared. As such, we do not present year-to-date or prior-year distribution coverage ratios when a drop down, and its funding, impacts distributable cash flow. |
(4) Gross basis, represents 100% of volume throughput for Ohio Gathering, based on a one-month lag. |
SUMMIT MIDSTREAM PARTNERS, LP AND SUBSIDIARIES |
|||||||||||||||
UNAUDITED RECONCILIATION OF REPORTABLE SEGMENT ADJUSTED EBITDA |
|||||||||||||||
TO ADJUSTED EBITDA |
|||||||||||||||
Three months ended December 31, |
Year ended December 31, |
||||||||||||||
2016 |
2015 |
2016 |
2015 |
||||||||||||
(In thousands) |
|||||||||||||||
Reportable segment adjusted EBITDA (1): |
|||||||||||||||
Utica Shale (2) |
$ |
16,566 |
$ |
13,222 |
$ |
66,637 |
$ |
35,873 |
|||||||
Williston Basin |
18,730 |
16,191 |
79,475 |
34,008 |
|||||||||||
Piceance/DJ Basins |
30,121 |
27,152 |
109,241 |
110,222 |
|||||||||||
Barnett Shale |
13,516 |
14,082 |
54,634 |
59,526 |
|||||||||||
Marcellus Shale |
4,649 |
4,722 |
19,203 |
23,214 |
|||||||||||
Total |
83,582 |
75,369 |
329,190 |
262,843 |
|||||||||||
Less corporate and other (3) |
10,861 |
6,837 |
37,589 |
27,352 |
|||||||||||
Adjusted EBITDA |
$ |
72,721 |
$ |
68,532 |
$ |
291,601 |
$ |
235,491 |
__________
(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) Deferred Purchase Price Obligation expense, (vii) impairments and (viii) other noncash expenses or losses, less other noncash income or gains. |
(2) Includes our proportional share of adjusted EBITDA for Ohio Gathering, based on 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 or that have not been allocated to our reportable segments, including certain general and administrative expense items, transaction costs, interest expense and Deferred Purchase Price Obligation income or expense. |
SUMMIT MIDSTREAM PARTNERS, LP AND SUBSIDIARIES |
|||||||||||||||
UNAUDITED RECONCILIATIONS TO NON-GAAP FINANCIAL MEASURES |
|||||||||||||||
Three months ended December 31, |
Year ended December 31, |
||||||||||||||
2016 |
2015 |
2016 |
2015 |
||||||||||||
(Dollars in thousands) |
|||||||||||||||
Reconciliations of net income or loss to adjusted EBITDA and distributable cash flow: |
|||||||||||||||
Net income (loss) |
$ |
13,995 |
$ |
(220,890) |
$ |
(38,187) |
$ |
(222,228) |
|||||||
Add: |
|||||||||||||||
Interest expense |
16,160 |
14,229 |
63,810 |
59,092 |
|||||||||||
Income tax expense |
— |
— |
75 |
— |
|||||||||||
Depreciation and amortization (1) |
28,603 |
27,310 |
112,661 |
105,903 |
|||||||||||
Proportional adjusted EBITDA for equity method investees (2) |
10,429 |
11,675 |
45,602 |
33,667 |
|||||||||||
Adjustments related to MVC shortfall payments (3) |
(22,218) |
(13,816) |
11,600 |
(11,902) |
|||||||||||
Unit-based and noncash compensation |
1,985 |
1,422 |
7,985 |
7,017 |
|||||||||||
Deferred Purchase Price Obligation expense (4) |
24,738 |
— |
55,854 |
— |
|||||||||||
Loss (gain) on asset sales, net |
69 |
42 |
93 |
(172) |
|||||||||||
Long-lived asset impairment |
23 |
1,609 |
1,764 |
9,305 |
|||||||||||
Goodwill impairment |
— |
248,851 |
— |
248,851 |
|||||||||||
Less: |
|||||||||||||||
Interest income |
— |
— |
— |
2 |
|||||||||||
Income tax benefit |
66 |
969 |
— |
603 |
|||||||||||
Income (loss) from equity method investees |
997 |
931 |
(30,344) |
(6,563) |
|||||||||||
Adjusted EBITDA |
$ |
72,721 |
$ |
68,532 |
$ |
291,601 |
$ |
235,491 |
|||||||
Add: |
|||||||||||||||
Cash interest received |
— |
— |
— |
2 |
|||||||||||
Cash taxes received |
— |
— |
50 |
— |
|||||||||||
Less: |
|||||||||||||||
Cash interest paid |
5,783 |
4,999 |
63,000 |
59,302 |
|||||||||||
Senior notes interest adjustment (5) |
9,750 |
9,750 |
— |
(1,421) |
|||||||||||
Maintenance capital expenditures |
4,386 |
3,035 |
17,745 |
12,681 |
|||||||||||
Distributable cash flow |
$ |
52,802 |
$ |
50,748 |
$ |
210,906 |
$ |
164,931 |
|||||||
Distributions declared (6) |
$ |
44,452 |
$ |
40,977 |
$ |
170,981 |
$ |
157,960 |
|||||||
Distribution coverage ratio (7) |
1.19x |
* |
* |
* |
__________
* Not considered meaningful |
(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, based on a one-month lag. |
(3) Adjustments related to MVC shortfall payments account for (i) the net increases or decreases in deferred revenue for MVC shortfall payments and (ii) our inclusion of expected annual MVC shortfall payments. |
(4) Deferred Purchase Price Obligation expense represents the change in the present value of the Deferred Purchase Price Obligation. |
(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 $300.0 million 7.5% senior notes is paid in cash semi-annually in arrears on January 1 and July 1 until maturity in July 2021. |
(6) Represents distributions declared in respect of a given period. For example, for the year ended December 31, 2016, represents the distributions paid in May 2016 for the first quarter of 2016, August 2016 for the second quarter of 2016, November 2016 for the third quarter of 2016, and February 2017 for the fourth quarter of 2016. |
(7) Distribution coverage ratio calculation for the three months ended December 31, 2016 is based on distributions declared in respect of the fourth quarter of 2016. Represents the ratio of distributable cash flow to distributions declared. Due to the common control nature of drop down transactions and to the extent that common control existed during a given reporting period, our results are reported on an as-if pooled basis with no adjustment to past distributions declared. As such, we do not present year-to-date or prior-year distribution coverage ratios when a drop down, and its funding, impacts distributable cash flow. |
SUMMIT MIDSTREAM PARTNERS, LP AND SUBSIDIARIES |
|||||||
UNAUDITED RECONCILIATIONS TO NON-GAAP FINANCIAL MEASURES |
|||||||
Year ended December 31, |
|||||||
2016 |
2015 |
||||||
(In thousands) |
|||||||
Reconciliation of net cash provided by operating activities to adjusted EBITDA and distributable cash flow: |
|||||||
Net cash provided by operating activities |
$ |
230,495 |
$ |
191,375 |
|||
Add: |
|||||||
Interest expense, excluding debt issuance costs |
59,834 |
54,783 |
|||||
Income tax expense |
75 |
— |
|||||
Changes in operating assets and liabilities |
(11,014) |
3,541 |
|||||
Proportional adjusted EBITDA for equity method investees (1) |
45,602 |
33,667 |
|||||
Adjustments related to MVC shortfall payments (2) |
11,600 |
(11,902) |
|||||
Less: |
|||||||
Distributions from equity method investees |
44,991 |
34,641 |
|||||
Interest income |
— |
2 |
|||||
Income tax benefit |
— |
603 |
|||||
Write-off of debt issuance costs |
— |
727 |
|||||
Adjusted EBITDA |
$ |
291,601 |
$ |
235,491 |
|||
Add: |
|||||||
Cash interest received |
— |
2 |
|||||
Cash taxes received |
50 |
— |
|||||
Less: |
|||||||
Cash interest paid |
63,000 |
59,302 |
|||||
Senior notes interest adjustment (3) |
— |
(1,421) |
|||||
Maintenance capital expenditures |
17,745 |
12,681 |
|||||
Distributable cash flow |
$ |
210,906 |
$ |
164,931 |
__________
(1) Reflects our proportionate share of Ohio Gathering adjusted EBITDA, based on a one-month lag. |
(2) Adjustments related to MVC shortfall payments account for (i) the net increases or decreases in deferred revenue for MVC shortfall payments and (ii) our inclusion of expected annual MVC shortfall payments. |
(3) 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 $300.0 million 7.5% senior notes is paid in cash semi-annually in arrears on January 1 and July 1 until maturity in July 2021. |
To view the original version on PR Newswire, visit:http://www.prnewswire.com/news-releases/summit-midstream-partners-lp-reports-fourth-quarter-and-full-year-2016-financial-results-and-reaffirms-2017-guidance-300412893.html
SOURCE
Marc Stratton, Senior Vice President and Treasurer, 832-608-6166, ir@summitmidstream.com