Summit Midstream Partners ((SMC)) has held its Q1 earnings call. Read on for the main highlights of the call.
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Summit Midstream Partners recently held an earnings call that conveyed a predominantly positive sentiment, underscored by robust liquidity, strategic acquisitions, and strong performance across various segments. Despite challenges such as declining crude prices and natural gas volumes in the Rockies, the company’s significant achievements were highlighted as outweighing these potential headwinds.
Strong Liquidity Position
Summit Midstream Partners has bolstered its financial standing by raising $250 million through senior secured second lien notes. This strategic move has positioned the company with over $350 million of liquidity, providing a solid foundation for future operations and growth initiatives.
Reinstatement of Preferred Stock Dividend
In a move that signals financial stability, Summit Midstream’s Board of Directors reinstated a cash dividend on the Series A preferred stock in March. This decision marks progress towards the potential reinstatement of common dividends, reflecting confidence in the company’s fiscal health.
Accretive Acquisition of Moonrise Midstream
The acquisition of Moonrise Midstream has been a strategic win for Summit Midstream, expanding their footprint in the DJ Basin. This acquisition is expected to provide additional operating synergies, enhancing the company’s operational capabilities and market reach.
Increase in Permian Basin Gas Volumes
The Double E pipeline in the Permian Basin has seen a notable increase in average daily volumes, growing by 8% quarter-over-quarter. This growth underscores the strength of Summit Midstream’s operations in this key region.
Mid-Con Segment Performance
The Mid-Con segment reported a significant increase in adjusted EBITDA, reaching $22.5 million. This $9.6 million rise was driven by an acquisition and increased volume throughput, highlighting the segment’s robust performance.
Rockies Segment Volume Growth
In the Rockies segment, there was an 8.8% increase in liquids volume throughput, accompanied by higher freshwater sales. This growth indicates strong demand and operational efficiency in the region.
Decrease in Crude Oil Prices
A significant reduction in crude oil prices since March poses a potential challenge, particularly for the crude-oriented Rockies segment. This downturn may impact activity levels in the second half of the year.
Natural Gas Volume Decline in Rockies
The Rockies segment experienced a 1.5% decrease in natural gas volume throughput, attributed to natural production declines. This presents a challenge that the company will need to address moving forward.
Lower-than-Expected BTU and NGL Content in Arkoma
The Arkoma wells underperformed in terms of BTU and NGL content, although initial production rates exceeded expectations. This mixed performance highlights areas for potential improvement.
Forward-Looking Guidance
Summit Midstream Corporation has reiterated its full-year adjusted EBITDA guidance of $245 million to $280 million, despite the downturn in crude oil prices. Capital expenditures are expected to range between $65 million and $75 million. The company remains optimistic about its strategic initiatives and operational efficiencies driving future growth.
In summary, Summit Midstream Partners’ earnings call reflected a predominantly positive sentiment, with strong liquidity, strategic acquisitions, and robust segment performances standing out as key achievements. While challenges such as declining crude prices and natural gas volumes in the Rockies present potential hurdles, the company’s forward-looking guidance and strategic initiatives suggest a confident outlook for the future.