On March 15, 2024, Summit Midstream Partners LP (SMLP, Financial) released its 8-K filing, detailing its financial and operating results for the fourth quarter and full year of 2023. The company, a key player in the oil and gas industry, operates midstream energy infrastructure assets across five reportable segments and is primarily involved in natural gas gathering from unconventional resource basins in the United States.
Financial Performance and Challenges
Summit Midstream Partners LP reported a net loss of $15.1 million for the fourth quarter of 2023. Despite the loss, the company achieved an adjusted EBITDA of $75.0 million for the quarter and $267 million for the full year. The adjusted EBITDA run-rate for the fourth quarter was indicative of a $300 million annualized rate. The company's performance is critical as adjusted EBITDA is a measure of its operational efficiency and ability to generate earnings before interest, taxes, depreciation, and amortization, which is important for assessing the company's financial health and operational performance.
Summit Midstream Partners LP also reported a Distributable Cash Flow (DCF) of $37.8 million and Free Cash Flow (FCF) of $20.4 million for the fourth quarter. These metrics are essential as they represent the cash that the company can distribute to unitholders and the cash that is available after capital expenditures, respectively, which are key indicators of the company's financial flexibility and sustainability.
Operational Highlights and Strategic Developments
The company connected 77 wells during the fourth quarter, bringing the total to 304 wells connected in 2023. This well connection rate is significant as it reflects the company's ability to expand its operations and secure future revenue streams. Summit Midstream Partners LP also highlighted its active customer base, with five drilling rigs and more than 140 drilled but uncompleted wells (DUCs) behind its systems, indicating a robust pipeline of potential future connections.
Strategically, the company commissioned de-bottlenecking projects in the DJ Basin and a compression project behind the Utica system, which are expected to enhance operational efficiency and contribute to revenue growth. New acreage dedications and a 10-year take-or-pay contract were also executed, which are expected to strengthen the company's position in its operating regions.
Management provided a 2024 adjusted EBITDA guidance range of $260 million to $300 million, reflecting current market conditions and natural gas price headwinds. The guidance is anchored by recent drilling schedules from customers and takes into account the volatility in commodity prices.
"Summit delivered solid fourth quarter 2023 financial and operating results representing run-rate Adjusted EBITDA of $300 million. It has been a very busy quarter, advancing a range of strategic alternatives and executing several key commercial milestones," said Heath Deneke, President, Chief Executive Officer, and Chairman.
Capital and Liquidity
As of December 31, 2023, Summit Midstream Partners LP had $14.0 million in unrestricted cash, $313 million drawn under its $400 million ABL Revolver, and $82.7 million of borrowing availability. The company was in compliance with all financial covenants, showcasing a solid financial position to support its operations and strategic initiatives.
In summary, Summit Midstream Partners LP's fourth quarter and full-year 2023 results reflect a company navigating through market challenges while positioning itself for future growth. The company's strategic review process and operational advancements underscore its commitment to maximizing value for unitholders and enhancing its competitive stance in the midstream energy sector.
For more detailed information, readers are encouraged to review the full 8-K filing.
Explore the complete 8-K earnings release (here) from Summit Midstream Partners LP for further details.
