Summit Midstream Corp (SMC) 2024 Q3 法說會逐字稿

Hello and welcome to Summit Midstream Corporation third-quarter 2024 earnings conference call. At this time, all participants are on a listen-only mode. (Operator Instructions)

您好，歡迎參加 Summit Midstream Corporation 2024 年第三季財報電話會議。此時，所有參與者都處於只聽模式。（操作員指令）

I would now like to hand the conference over to Randall Burton. You may begin.

現在我想將會議移交給蘭德爾伯頓。你可以開始了。

Thanks, operator, and good morning, everyone. If you don't already have a copy of our earnings release, please visit our website at www.summitmidstream.com, where you'll find it on the home page of Events & Presentation section or Quarterly Results section. With me today to discuss our third-quarter of 2024 financial and operating results is Heath Deneke, our President, Chief Executive Officer, and Chairman; Bill Mault, our Chief Financial Officer; along with other members of our senior management team.

謝謝接線員，大家早安。如果您還沒有我們的收益報告副本，請訪問我們的網站 www.summitmidstream.com，您可以在「活動和演示」部分或「季度業績」部分的主頁上找到它。今天與我一起討論我們 2024 年第三季的財務和營運業績的是我們的總裁、執行長兼董事長 Heath Deneke； Bill Mault，我們的財務長；以及我們高階管理團隊的其他成員。

Before we start, I'd like to remind you that our discussion today may contain forward-looking statements. These statements may include but are not limited to our estimates of future volumes, operating expenses, and capital expenditures. They may also include statements concerning anticipated cash flow, liquidity, business strategy, and other plans and objectives for future operations.

在我們開始之前，我想提醒您，我們今天的討論可能包含前瞻性陳述。這些聲明可能包括但不限於我們對未來產量、營運費用和資本支出的估計。它們還可能包括有關預期現金流、流動性、業務策略以及未來營運的其他計劃和目標的聲明。

Although we believe that the expectations reflected in such forward-looking statements are reasonable, we can provide no assurance that such expectations will prove to be correct. Please see SMLP's 2023 annual report on Form 10-K, and exhibit 99.1 to the partnership's current report on Form 8-K filed with the SEC on June 3, 2024, as well as SMC's registration statement on Form S-4 as declared effective on June 14, 2024, for a listing of factors that could cause actual results to differ materially from expected results.

儘管我們相信此類前瞻性聲明所反映的預期是合理的，但我們無法保證此類預期將被證明是正確的。請參閱 SMLP 2023 年 10-K 表年度報告、合夥企業於 2024 年 6 月 3 日向美國證券交易委員會提交的 8-K 表當前報告附件 99.1，以及 SMC 於 2024 年 6 月 14 日宣布生效的 S-4 表註冊聲明，其中列出了可能導致實際結果與預期結果存在重大的因素。

Please also note that on this call, we use the terms EBITDA, adjusted EBITDA, distributable cash flow, and free cash flow. These are non-GAAP financial measures, and we've provided reconciliations to the most directly comparable GAAP measures in our most recent earnings release. And with that, I'll turn the call over to Heath.

另請注意，在本次電話會議中，我們使用了 EBITDA、調整後 EBITDA、可分配現金流量和自由現金流量等術語。這些是非 GAAP 財務指標，我們在最近的收益報告中提供了與最直接可比較的 GAAP 指標的對帳。說完這些，我會把電話轉給希思。

Thanks, Randall, and good morning, everyone. Summit had a strong third quarter generating $45.2 million in adjusted EBITDA, representing about 9% quarter over quarter growth. All while we continue to execute on our broader corporate strategy through several critical transactions. Before jumping into operations, I wanted to quickly recap the progress we made on the corporate strategy front.

謝謝，蘭德爾，大家早安。Summit 第三季表現強勁，調整後 EBITDA 為 4,520 萬美元，較上季成長約 9%。同時，我們透過幾項關鍵交易繼續執行我們更廣泛的公司策略。在開始營運之前，我想快速回顧一下我們在公司策略方面的進展。

During the third quarter, we reorganized Summit from an [MOP] to a C-corp which simplified our corporate structure, made our stock appeal to a broader set of investors, and more than double our overall trading liquidity thus far. We also executed on a series of refinancing transactions which significantly reduced the total quantum of debt outstanding, reduced our overall cost of capital, and pushed the nearest debt maturity out to 2029.

在第三季度，我們將 Summit 從 [MOP] 重組為 C 公司，從而簡化了我們的公司結構，使我們的股票對更廣泛的投資者俱有吸引力，並且迄今為止我們的整體交易流動性增加了一倍以上。我們還執行了一系列再融資交易，大幅減少了未償還債務總額，降低了我們的整體資本成本，並將最近的債務到期日推遲到 2029 年。

And finally, on October 1st, we announced the acquisition of Tall Oak Midstream in the Arkoma Basin. This is a very value accretive and balance sheet enhancing transaction, which we believe increases our scale, further diversifies our portfolio with the addition of a high growth gas weighted asset and accelerates the potential timing of a return of capital program for our shareholders. Pro-forma for the Tall Oak transaction, Summit expects this to be about 3.8 times levered at closing, with approximately $250 million of pro-forma 2024 adjusted EBITDA.

最後，10 月 1 日，我們宣布收購阿科瑪盆地的 Tall Oak Midstream。這是一項非常具有增值性和增強資產負債表的交易，我們相信這將擴大我們的規模，透過增加高成長天然氣加權資產進一步多樣化我們的投資組合，並加速我們股東資本回報計劃的潛在時機。根據 Tall Oak 交易的預測，Summit 預計交易結束時槓桿率約為 3.8 倍，2024 年預測調整後 EBITDA 約為 2.5 億美元。

So all three of these strategic transactions position Summit, we believe, for continued growth and substantial value creation for our shareholders going forward.

因此，我們相信，這三項策略交易將使 Summit 在未來繼續成長，並為我們的股東創造可觀的價值。

Now, turning to operations. We continue to see encouraging levels of activity behind our systems which we expect will lead to continued adjusted EBITDA growth in the fourth quarter as well. During the third quarter, we connected 38 wells and currently have six rigs running behind our systems. None of the wells connected during the quarter were in the Barnett region, which brings total year-to-date Barnett well connects to 27, which exceeds the high end of our original 24 guidance range both volumetrically and from segment EBITDA standpoint.

現在，談談營運。我們繼續看到系統背後令人鼓舞的活動水平，我們預計這也將推動第四季度調整後 EBITDA 繼續成長。第三季度，我們連接了 38 口井，目前有 6 個鑽機在我們的系統後面運作。本季度連接的油井均不在巴奈特地區，這使得今年迄今為止巴奈特地區的連接油井總數達到 27 口，無論從產量還是從分部 EBITDA 的角度來看，都超過了我們最初 24 口的指導範圍的上限。

While it is too early to provide formal guidance for 2025, we continue to have a rig running behind the system, drilling wells that we think are that are currently scheduled to be completed in 2025. So we wouldn't be surprised if '25 ends up fairly similar to '24 from a total well connect perspective in the Barnett.

雖然現在為 2025 年提供正式指導還為時過早，但我們仍在系統後面運行鑽井平台，鑽探我們認為目前計劃於 2025 年完工的油井。因此，從巴奈特的整體連結角度來看，如果 25 年的結果與 24 年的結果非常相似，我們不會感到驚訝。

Moving over to the Rockies segment, we turned in line 29 wells in the DJ during the quarter, bringing total year-to-date well connects in the segment to 105 wells. Currently have five rigs running in the region and over 90 DUCs accumulated behind our system. And we're expecting another pretty active fourth quarter and first half of 2025.

至於落基山脈部分，我們在本季在 DJ 地區啟用了 29 口井，使該部分今年迄今的井總數達到 105 口。目前該地區有 5 個鑽機在運行，我們的系統累積了超過 90 個 DUC。我們預計 2025 年第四季和上半年將會再次相當活躍。

I would also like to highlight a few operational and engineering accomplishments during the third quarter. As you may recall during the second quarter, we experienced some operational downtime at one of our major compressor stations in the DJ, which pushed us to have to utilize third-party processing offloads which significantly impacted margins during the second quarter, and to some degree in the third quarter as well.

我還想強調一下第三季的一些營運和工程成就。您可能還記得，在第二季度，我們位於 DJ 的一個主要壓縮機站經歷了一些營運停機，這迫使我們不得不利用第三方處理卸載，這嚴重影響了第二季度的利潤率，並且在一定程度上也影響了第三季度的利潤率。

I'm happy to report that as of the beginning of October, we are back to full operating capacity in the DJ, and we expect our margins will improve on into the fourth quarter.

我很高興地報告，截至 10 月初，我們在 DJ 的營運能力已恢復滿負荷，我們預計我們的利潤率將在第四季度提高。

Additionally, during the third quarter, we made a final investment decision and began construction on a $10 million optimization project in the Rockies segment that is anticipated to have an approximate one-year payback and improve our adjusted EBITDA margins beginning in the second quarter of 2025, when it's turned online.

此外，在第三季度，我們做出了最終投資決定，並開始在落基山脈地區實施一項 1000 萬美元的優化項目，預計該項目將在大約一年內獲得回報，並從 2025 年第二季度開始提高我們的調整後 EBITDA 利潤率（屆時將上線）。

I'm moving to the rest of year outlook. As I've already mentioned, we continue to see robust activity levels behind our system, with six rigs running and, and over 100 DUCs on the system thus far. We expect the fourth quarter to be another very active quarter, and we expect to generate $45 million to $50 million of adjusted EBITDA during the quarter, which would represent about 5% growth at the midpoint from year -- or quarter over quarter.

我正在轉向今年剩餘時間的展望。正如我已經提到的，我們繼續看到我們系統背後的強勁活動水平，到目前為止，系統上有六個鑽孔機正在運行，並且有超過 100 個 DUC。我們預計第四季度將是一個非常活躍的季度，我們預計本季調整後 EBITDA 將達到 4,500 萬至 5,000 萬美元，按中位數計算，這將比去年​​同期或上季增長約 5%。

So with that, let me hand the call over to Bill, to provide some additional details on our financial results.

因此，讓我將電話交給比爾，以提供有關我們的財務結果的一些更多詳細資訊。

Thanks, Heath, and good morning, everyone. Summit reported a second quarter net loss of $197 million, which was impacted by $142 million of non-cash income tax expense associated with establishing Summit's deferred tax liability associated with the C-corp conversion.

謝謝，希斯，大家早安。Summit 公佈第二季淨虧損 1.97 億美元，這受到與 C 公司轉換相關的 Summit 遞延稅務負債建立相關的 1.42 億美元非現金所得稅費用的影響。

We generated adjusted EBITDA of $45.2 million, representing solid quarter-over-quarter growth in capital expenditures of $10.9 million, with the majority of the CapEx spent in the Rockies associated with pad connects in the new projects Heath had mentioned.

我們實現了 4520 萬美元的調整後 EBITDA，這意味著資本支出比上一季穩步增長了 1090 萬美元，其中大部分資本支出用於希思提到的落基山脈新項目的平台連接。

With respect to SMLP's balance sheet, we have net debt of approximately $728 million. Our available borrowing capacity at the end of the third quarter totaled approximately $350 million, which included $1 million of [LCs].

就 SMLP 的資產負債表而言，我們的淨債務約為 7.28 億美元。截至第三季末，我們的可用借款能力總計約為 3.5 億美元，其中包括 100 萬美元的[LC]。

Now on to the segments. In the Rockies segment which is inclusive of our DJ and Williston basin systems. We generated adjusted EBITDA of $24.9 million, a 9% increase relative to second quarter. The increase in adjusted EBITDA is due primarily to increase product margin. And as Heath mentioned, we finished up some maintenance on the DJ system which really negatively impacted earnings in the second quarter. With that maintenance complete, we're not offloading as much gas to neighboring systems.

現在開始討論片段。落基山脈部分包括我們的 DJ 和威利斯頓盆地系統。我們調整後的 EBITDA 為 2,490 萬美元，較第二季成長 9%。調整後 EBITDA 的增加主要歸因於產品利潤率的提高。正如希思所提到的，我們完成了對 DJ 系統的一些維護，這對第二季的收益產生了負面影響。維護完成後，我們不會向鄰近系統卸載太多天然氣。

In addition, while volumes were relatively flat quarter over quarter, we had relatively more volume coming from higher margin contracts.

此外，雖然交易量較上季持平，但來自高利潤合約的交易量相對較多。

On the crude side, liquids volumes averaged 70,000 barrels a day. A decrease of 5,000 barrels a day relative to the second quarter, due primarily to natural production declines, and no new wells connected to the system.

原油方面，液態原油產量平均每天為 7 萬桶。與第二季相比，每天減少 5,000 桶，主要原因是自然產量下降，以及沒有新油井連接到該系統。

Natural gas volumes averaged 128 million cubic feet a day. A decrease of 2 million cubic feet per day relative to the second quarter. And we connected 28 wells in the DJ during the quarter. The Rockies segment currently has five rigs running behind the systems, and approximately 90 DUCs.

天然氣產量平均每天為1.28億立方英尺。與第二季度相比，每天減少了200萬立方英尺。本季度，我們連接了 DJ 的 28 口井。落基山脈部分目前有 5 個鑽機在系統後面運行，還有大約 90 個 DUC。

The Permian Basin segment which includes our 70% interest in the Double E pipeline reported adjusted EBITDA of $8.4 million, an increase of $0.8 million relative to the second quarter, due primarily to higher volume throughput on the pipe. Volume throughput on Double E averaged 661 million cubic feet per day, representing an increase of 20% relative to the second quarter, and an increase of approximately 100% from the third quarter of last year.

二疊紀盆地部門（包括我們在 Double E 管道中的 70% 權益）報告調整後的 EBITDA 為 840 萬美元，較第二季度增加 80 萬美元，這主要歸因於管道吞吐量增加。雙 E 航線的吞吐量平均為每天 6.61 億立方英尺，較第二季成長 20%，較去年第三季成長約 100%。

We're excited about the momentum we are seeing behind the pipe and continue to work on additional commercial contracts.

我們對管道背後的發展勢頭感到非常興奮，並將繼續致力於更多的商業合約。

The Piceance segment reported adjusted EBITDA of $12.8 million, consistent with the second quarter. Volume throughput averaged 284 million cubic feet per day during the quarter, a decrease of approximately 2%.

Piceance 部門報告調整後 EBITDA 為 1,280 萬美元，與第二季持平。本季度，貨物吞吐量平均為每天 2.84 億立方英尺，下降約 2%。

The Barnett segment reported adjusted EBITDA of $7.3 million, an increase of $1.9 million relative to the second quarter, primarily due to a 26% increase in volume throughput from the second quarter. The volume throughput increase is primarily due to our anchor customer completing and connecting nine new wells during the quarter.

巴奈特部門報告調整後 EBITDA 為 730 萬美元，較第二季增加 190 萬美元，主要由於吞吐量較第二季增加 26%。產量增加主要歸因於我們的主要客戶在本季度完成並連接了九口新井。

Additionally, as we mentioned last quarter, another customer on the system who's had production shut-in, partially resumed flowing approximately 10 million to 15 million cubic feet per day of shut-in gas in June. Over the past month, they have slowly increased production and are now flowing approximately 20 million to 25 million cubic feet per day. We still believe there's approximately 20 million cubic feet per day of shut-in production behind the system.

此外，正如我們上個季度提到的那樣，該系統中另一位已停止生產的客戶在 6 月部分恢復了每天約 1,000 萬至 1,500 萬立方英尺的停產天然氣流量。過去一個月，他們慢慢提高了產量，現在每天的流量約為 2000 萬到 2500 萬立方英尺。我們仍然相信，該系統每天的封閉生產量約為 2000 萬立方英尺。

With that, there's still currently one rig running and 14 DUCs behind the system today. And with that, I'll turn the call back over to Heath for closing remarks.

目前，系統背後仍有一台鑽孔機在運行，14 台 DUC。最後，我將把電話轉回給希思，請他作最後發言。

Thank you, Bill. And before I hand the call over for questions, I wanted to remind everyone of our upcoming special meeting of shareholders scheduled for November 29, 2024. We filed a definitive proxy related to the Tall Oak acquisition with the SEC on October 31, materials have been mailed out to all shareholders. We strongly encourage all shareholders to vote for this very important and value-enhancing transaction. If there are any questions related to the proxy or otherwise, please don't hesitate to reach out to us. And with that, operator, please open the line for questions.

謝謝你，比爾。在我將電話轉交給提問者之前，我想提醒大家，我們即將於 2024 年 11 月 29 日召開特別股東大會。我們於10月31日向美國證券交易委員會提交了與Tall Oak收購相關的最終代理文件，資料已郵寄給所有股東。我們強烈鼓勵所有股東投票支持這項非常重要且能增值的交易。如果對代理商或其他方面有任何疑問，請隨時與我們聯繫。接線員，請打開熱線來回答問題。

Thank you. (Operator Instructions) Please stand by while we compile the Q&A roster.

謝謝。（操作員指示）我們正在編製問答名單，請稍候。

Ladies and gentlemen, I'm showing no questions in the queue. That concludes today's conference call. Thank you for your participation. You may now disconnect.

女士們、先生們，我沒有顯示隊列中有任何疑問。今天的電話會議到此結束。感謝您的參與。您現在可以斷開連線。