Summit Midstream expands with Moonrise acquisition

HOUSTON - Summit Midstream Corporation (NYSE: SMC), a player in the midstream energy sector, has completed the acquisition of Moonrise Midstream, LLC from Fundare Resources Company Holdco, LLC. The transaction, valued at $90 million, includes $70 million in cash and $20 million in Summit equity. Today, the company detailed the benefits of this strategic move, which enhances its operations in the DJ Basin. According to InvestingPro data, SMC’s stock has delivered an impressive 89.94% return over the past year, despite operating with significant debt levels.

The acquisition adds approximately 80 miles of natural gas and 25 miles of crude oil gathering pipelines, along with a 65 million cubic feet per day (MMcf/d) natural gas processing plant in Weld County, Colorado. This additional capacity, which can be expanded to about 100 MMcf/d with modest investment, is expected to provide Summit’s customers with increased processing capability, redundancy, and flow assurance. The company anticipates this will support volume growth in a capital-efficient manner. InvestingPro analysis indicates the company’s current Fair Value suggests it may be undervalued, with additional insights available in the comprehensive Pro Research Report covering over 1,400 US stocks.

Heath Deneke, Summit’s CEO, highlighted the transaction’s alignment with the company’s consolidation strategy and its potential to create operational and commercial synergies. The purchase is seen as leverage-neutral and is financed through Summit’s credit facility and the issuance of approximately 0.5 million shares of SMC Class A common stock. The company’s debt-to-equity ratio stands at 1.76, with total debt of $957 million as reported in recent financial statements.

The Moonrise assets are supported by long-term, fee-based contracts, with half of the dedicated volumes under life-of-lease agreements and the remainder having an average term of over 13 years. Summit’s existing infrastructure is already operationally connected to Moonrise, which is seen as a key factor in achieving the anticipated synergies.

Summit Midstream Corporation focuses on developing and operating infrastructure assets in core areas of unconventional resource basins in the United States. The company’s services include natural gas, crude oil, and produced water gathering, processing, and transportation, primarily under long-term, fee-based agreements.

The information in this article is based on a press release statement.

In other recent news, Summit Midstream Corporation has announced the issuance of an additional $250 million in senior secured second lien notes due in 2029. This financial move aims to repay a portion of the company’s asset-based lending credit facility and cover general corporate expenses. The additional notes will join an existing series of $575 million in 8.625% notes, bringing the total to $825 million. These notes are secured by the same collateral backing the company’s lenders and will be treated as a single class with the existing notes. The issuance is part of Summit Midstream’s broader strategy to manage its debt portfolio and liquidity needs. The company has the option to redeem up to 40% of the notes at a premium before July 31, 2026, with full or partial redemption possible after this date. The notes will mature on October 31, 2029, with interest payable semi-annually. Summit Midstream’s recent SEC filing outlines the legal framework for these financial obligations, including covenants and potential events of default.

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