Earnings call transcript: Summit Midstream’s Q1 2025 sees steady performance

Summit Midstream Corporation reported its financial results for the first quarter of 2025, showcasing a stable performance amid a challenging market environment. The company achieved an adjusted EBITDA of $57.5 million and maintained its full-year guidance, despite significant fluctuations in crude oil prices. Summit’s stock currently trades at $131.10, having moved within a 52-week range of $121.73 to $160.04. According to InvestingPro data, the stock has delivered a modest 1.98% return over the past year.

Key Takeaways

• Adjusted EBITDA for Q1 2025 was $57.5 million.
• Full-year 2025 adjusted EBITDA guidance remains between $245 million and $280 million.
• Summit acquired Moonrise Midstream and connected 41 new wells.
• The Double E pipeline saw an 8% increase in volumes quarter-over-quarter.

Company Performance

Summit Midstream Corporation demonstrated resilience in Q1 2025, though InvestingPro analysis indicates some concerns with a Weak Financial Health Score of 1.6 out of 5. The company’s strategic acquisition of Moonrise Midstream and the connection of 41 new wells highlight its commitment to growth and operational efficiency. With a focus on optimizing its Rockies segment and increasing pipeline volumes, Summit continues to pursue operational improvements despite challenging conditions.

Financial Highlights

• Adjusted EBITDA: $57.5 million for Q1 2025.
• Capital Expenditures: $20.6 million for the quarter.
• Net Debt: Approximately $959 million.
• Available Borrowing Capacity: $354 million.

Outlook & Guidance

Summit Midstream has maintained its full-year 2025 adjusted EBITDA guidance, projecting a range of $245 million to $280 million. The company expects total capital expenditures for the year to be between $65 million and $75 million. Summit remains focused on strategic initiatives and financial discipline, with a potential to trend towards the lower end of guidance if well completions are deferred.

Executive Commentary

CEO Heath Deneke highlighted Summit’s strong balance sheet and active customer base, stating, "Summit is well positioned with a strong balance sheet and active customer base to navigate the current market environment." He also noted the company’s successful capital raise: "We raised $250 million of additional senior secured second lien notes."

Risks and Challenges

• Significant reduction in crude oil prices could impact revenue from oil-related segments.
• Potential dampening of activity in the crude-oriented Rockies segment.
• Dependence on natural gas market strength and Gulf Coast demand growth.
• Market volatility and macroeconomic pressures could affect future performance.

Summit Midstream’s Q1 2025 results reflect a company navigating a complex market landscape with strategic foresight and operational strength. While challenges remain, Summit’s focus on pipeline optimization and financial discipline positions it well for future growth.

Full transcript - Summit Midstream Partners LP (SMLP) Q1 2025:

Dee, Conference Operator: Thank you for standing by. My name is Dee, and I will be your conference operator today. At this time, I would like to welcome everyone to the First Quarter twenty twenty five Summit Midstream Corporation Earnings Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers’ remarks, there will be a question and answer Thank you.

I would now like to turn the call over to Randall Burton. Please go ahead.

Randall Burton, Unknown Executive, Summit Midstream Corporation: 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 homepage, Events and Presentations section, or Quarterly Results section. With me today to discuss our first quarter of twenty twenty five financial and operating results is Heath Deneke, our President, Chief Executive Officer and Chairman Bill Malt, our Chief Financial Officer, along with other members of our senior management team. 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. 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 SMC’s annual report on Form 10 ks for the fiscal year ended 12/31/2024, which the company filed with the SEC on 03/11/2025, as well as our other SEC filings for a listing of factors that could cause actual results to differ materially from expected results. 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 have 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.

Heath Deneke, President, Chief Executive Officer and Chairman, Summit Midstream Corporation: Thanks, Randall, and good morning, everyone. Thank you for joining us today to discuss our financial and operating results for the first quarter of twenty twenty five. We had an active first quarter, both from a corporate and operational perspective, and we remain on track to continue to execute on our strategic objectives for the remainder of the year. Combined with the various strategic activities we implemented in 2024, Summit is positioned with a strong balance sheet to remain resilient despite the latest macro down cycle while opportunistic on the M and A front. In January, we raised $250,000,000 of additional senior secured second lien notes, the proceeds of which were used to repay revolver borrowings and position the company with over $350,000,000 of liquidity.

In March, the Board of Directors reinstated the cash dividend on the Series A preferred stock, which is the first step as we continue to work towards reinstatement of common dividend in the future. Also in March, we closed on the accretive acquisition of Moonrise Midstream, which further expands our DJ Basin footprint while providing additional operating synergies and capacity to help meet future growth in the basin over the years to come. Operationally, we connected 41 wells during the first quarter, which was in line with expectations, and we continue to have an active customer base with six active drilling rigs and over 100 drilled but uncomplete wells currently behind our system. Now obviously, there has been a significant reduction in crude oil prices since we released guidance in 2025 back in early March, and it does have some potential to dampen activity levels in the second half of the year in our crude oriented Rockies segment. However, the outlook on the natural gas side remains strong, which from an overall Summit portfolio perspective has the potential to mitigate the potential downside exposure associated with the crude segment for the year.

In the Rockies segment, we connected 30 new wells to the system during the first quarter, including 22 in the DJ and eight in the Williston. And to date, substantially all of the wells scheduled to come online in the first half of the year have already been turned in line or are in the process of being completed. Additionally, we commissioned a significant optimization project in March that is expected to improve our adjusted EBITDA margins beginning in the second quarter. Looking at the second half of the year for the Rocky segment, we currently have four rigs running behind our systems and with the exception of one pad on the schedule that’s expected to be completed in December, all of the remaining wells are expected to be turned in line during the second half of the year are either drilled but incomplete wells or are currently in the process of being drilled. As you would expect, we remain in very close communication with our customer base to evaluate the potential implications of the current crude price environment on well completion activities and turn in line dates during the second half of the year.

While there have been some relatively minor revisions to date and there is potential for slippage if prices were to weaken further towards the low 50s, our customers expect second half of twenty twenty five completion schedules to largely remain intact at this time. And just as a reminder, as we said in the earnings release, our Rockies segment adjusted EBITDA guidance for the year is 100,000,000 to $125,000,000 with the low end of the range already reflecting a two- to three month delay relative to current customer drilling and completion schedules that have been provided for the second half of the year. In the Mid Con segment, we turned in line 11 wells during the quarter, including five in the Barnett and six in the Arkoma. Subsequent to quarter end, we turned in line an additional six wells in the Barnett and three in the Arkoma. While the wells in the Arkoma did have lower than expected B2 and NGL content, the initial production rates outperformed our internal expectations, which led to significant volume growth relative to the fourth quarter.

We continue to remain very excited about the Mid Con segment as natural gas strip prices remain favorable and we have significant dedicated inventory remaining as demand is expected to grow in the coming years in the Gulf Coast region. And finally, in the Permian segment, we continue to see gas volumes increase on the Double E pipeline, with average daily volumes growing by 8% quarter over quarter. And as of this week, we’re actually averaging close to 700,000,000 a day of throughput on the system. So even with the recent softening in crude prices, we still anticipate a tremendous amount of growth in residue gas in the Delaware Basin over the next five years, and given that most of the existing in basin pipeline takeaway capacity is approaching full utilization, we remain very optimistic in our ability to further commercialize Double E in the years ahead. So given the activity levels we are seeing today behind our footprint and real time feedback from our customers, we are at this time reiterating our full year 2025 financial guidance range of $245,000,000 to $280,000,000 in adjusted EBITDA and total capital expenditures of $65,000,000 to $75,000,000 As we stated in the earnings release, to the extent all of the remaining wells anticipated to come online during the second half of the year in the Rockies segments are deferred, we would expect to trend towards the lower end of our existing guidance range.

As always, we’ll continue to monitor activity levels behind our footprint and we’ll provide updates throughout the year as they become available. And with that, I’ll hand it over to Bill to provide additional details on our financial results.

Bill Malt, Chief Financial Officer, Summit Midstream Corporation: Thanks, Heath, good morning, everyone. Summit reported first quarter adjusted EBITDA of $57,500,000 and capital expenditures of 20,600,000.0 with the majority of the CapEx spend in the Rockies and Mid Con segments associated with pad connections and the previously announced optimization project in The Rockies. With respect to SMC’s balance sheet, we had net debt of approximately $959,000,000 and our available borrowing capacity at the end of the first quarter totaled approximately $354,000,000 which included $1,000,000 of undrawn letters of credit. Now moving on to the segments. The Rockies segment, which is inclusive of our DJ and Williston Basin systems, generated adjusted EBITDA of $24,900,000 an increase of $1,600,000 from the fourth quarter, primarily due to an 8.8% increase in liquids volume throughput, higher freshwater sales, and the acquisition of Moonrise Midstream in the DJ Basin on 03/10/2025.

This was partially offset by a 1.5 decrease in natural gas volume throughput. Liquids volumes averaged 74,000 barrels a day, an increase of 6,000 barrels a day relative to the fourth quarter, primarily due to 17 new wells connected to the system late in the fourth quarter of twenty twenty four, ’8 new wells connected to the system during the quarter, and a partial month contribution from Moonrise Midstream. Natural gas volumes averaged 129,000,000 cubic feet per day, a decrease of 2,000,000 cubic feet per day relative to the fourth quarter, primarily due to natural production declines from wells brought online during the second half of twenty twenty four behind our DJ Basin system, partially offset by twenty twenty two new wells connected during the quarter and partial month contribution of Moonrise and Midstream. The Rockies segment currently has four rigs running behind the systems, including three in the Williston and one in the DJ and more than 90 docks. The Permian Basin segment, which includes our 70% interest in the Double E pipeline, reported adjusted EBITDA of $8,300,000 an increase of $05,000,000 relative to the fourth quarter, due primarily to higher volume throughput on the pipe.

Volume throughput on Double E averaged to six sixty four million cubic feet per day during the first quarter. The Peon segment reported adjusted EBITDA of $11,800,000 flat relative to the fourth quarter due primarily to lower operating expenses, partially offset by a 4% decrease in volume throughput. Mid Con segment reported adjusted EBITDA of 22,500,000.0, an increase of 9,600,000 relative to the fourth quarter, primarily due to the acquisition of Tall Oak that closed in December 2024 and an increase in volume throughput. Volume throughput on the system increased 48% relative to the fourth quarter, primarily due to incremental volume throughput from a full quarter contribution of the Tall Oak assets, 11 new well connections, incremental production from a new customer connected to the Arkoma system, a full quarter contribution of production that was previously shut in in the Barnett, all of which was partially offset by initial production declines from wells connected in the second half of twenty twenty four. There are currently two rigs running, including one in the Barnett and one in the Arkoma and 16 docks behind the system.

Additionally, a customer in the Barnett has recently completed and starting flowing a free well pad that was drilled and held in dock inventory since 02/2023. The same customer continues to run a completion crew on another existing dock behind the system. And with that, I’ll turn the call back over to Heath for closing remarks.

Heath Deneke, President, Chief Executive Officer and Chairman, Summit Midstream Corporation: Thank you, Bill. In conclusion, Summit is well positioned with a strong balance sheet and active customer base to navigate the current market environment and capitalize on growth opportunities. We will continue to focus executing our strategic initiatives, maintaining financial discipline and delivering value to our shareholders. We thank you for your continued support and confidence in Summit, and I look forward to updating you on our progress in the coming quarters ahead. With that, operator, I’d like to open up the call for questions.

Dee, Conference Operator: Thank you. We will now begin the question and answer session. If you have dialed in and would like to ask a question, please press star one on your telephone keypad to raise your hand and join the queue. If you would like to withdraw your question, simply press star one again. If you are called upon to ask your question or listening via loudspeaker on your device, please pick up your handset and ensure that your phone is not on mute when you’re asking questions.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.