Q3 2025 Summit Midstream Corp Earnings Call

Good day, and thank you for standing by. Welcome to the third quarter of 2025 some in Midstream Corporation earnings conference call. At this time will participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session to ask a question during the session. You will need to press star 1, 1 on your telephone. You will then hear an automated message. Advising your hand is raised to withdraw your question. Please press star 1 1 again.

Please be advised that today's conference is being recorded.

I would now like to hand the conference over to your speaker today, Randall Burton, Vice President, Finance and Treasurer. Please go ahead.

Thanks operator and good morning. Everyone. If you don't already have a copy of our earnings release, please visit our website at Summit, midstream.com, where you'll find it on the homepage events and presentation section or quarterly results section with me today, to discuss our third quarter of 2025 financial and operating results as Heath daniki. 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-K for the fiscal year ended December 31, 2024, which the company filed with the SEC on March 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 ibida, adjusted ibida. Distributable cash flow and free cash flow. These are non-gaap Financial measures and and we have provided reconciliations, most directly comparable, gaap measures in our most recent earnings release. And with that, I'll turn the call over to Heath.

Great. All right. Thanks Randall. And good morning, everyone.

We had a strong third quarter with continued growth across our operating footprint. Adjusted EVA was $65.5 million, which is more than a 7% increase from the second quarter, representing roughly $260 million of run rate EVA.

We also generated 36.7 million of distributable, cash flows and 16.7 million of free cash flow during the quarter.

Operationally, we connected 21, new wells, during the third quarter, and our customer base remains, very active with 5, drill and Rigs and more than 90 drilled, but uncomplete Wells behind our systems.

Additionally, volumes on the Double E Pipeline continue to grow throughout the quarter, hitting new record averages of 712 million a day for the quarter and 745 million a day for the month of September.

As we've disclosed in previous quarters, we continue to expect Financial results to Trend towards low end of our guidance, our original 2025 adjusted, Eva dog guidance range primarily as a result of certain well-connected being delayed. However, those timing delays have been short-lived, as we expect to connect an additional 50 Wells to the system during the fourth quarter. And in the year, around the midpoint of our original wellcon, guidance range of 125 to 185 Wells.

We expect the makeup and customer activity during the fourth quarter to drive significant volumetric and EBITDA growth as we look ahead into 2026.

And finally, we remain encouraged by the level of customer engagement, and visibility in the next year's programs. We're currently working with several customers on their 2026 development plans, which include more than 120 new. Well, connects in the first half of 2026

As customers continue to develop their budget and development schedules for the full year. That number could increase significantly as customers begin to fill in the back half of 26, with additional development.

And with that, I'd like to turn the call over to Bill to walk through the financial and segment level details.

Thanks Chief and good morning everyone Summit. Reported third quarter adjusted, Evita 65.5 million and capital expenditures of 22.9 million with the majority of the capital spend in the Rockies and Midtown segments related to pad connections and compressor relocations.

Year to date, capital expenditures included approximately $14 million of non-recurring integration and optimization projects.

Complete by the end of 2025.

So far this year, we have successfully redeployed 7 Leighton compressors from the Peons and 2 from the DJ Basin to the Aroma, and have identified an additional 3 units that we are actively working to relocate.

While we are incurring the capital investment today, we would expect these activities to mitigate compressor lease expense and improve even down margin beginning in 2026.

We expect all 12 latent units being relocated to represent over 4 million in annual compressor lease expense.

With respect to summit's balance sheet, we had net debt of approximately 950 million.

and now, on to the segments,

The rocky segment, which includes our DJ and Willis Beisan systems, generated adjusted EBITDA of $29 million, an increase of $3.8 million from the second quarter.

Driven by an increase in fixed fee revenue and improved product margin.

Product margin benefited from increased volume throughput and stronger realized NGL and compensate pricing.

Partially offset by lower residue gas prices.

As a reminder, the Rockies region 10 staff seasonally higher residue gas prices in the fourth and first quarters each year.

Natural gas, volume throughput, averaged 158 million cubic feet per day during the quarter. An increase of approximately 7 and a half percent relative to the second quarter.

Primarily due to the first half of 2025, while connections are reaching peak production and increasing third-party ones.

liquids volumes average, 72,000 barrels per day. A decrease of 6,000 barrels per day relative to the second quarter primarily due to Natural production declines.

We connected 9, new wells in the quarter, 4 in the DJ and 5 in the willowstone. And currently have 3 rigs running and about 75. Docks behind the system.

Before moving on to the other segments. Some of this disclosing, some incremental information in its 10 Cube to further break down Gathering related fees between its liquids, business and natural gas business.

We think this incremental disclosure will help our investors further understand and estimate Revenue contribution based on liquids and natural gas volume throughput.

Please make sure to reach out to Randall or I if you have any questions.

We continue to expect doubly growth as existing take or pay contracts continue to ramp up from approximately 1.069 BCF per day. On average in 2025,

to 1.115 BCF per day in 2026.

With an additional 100 million cubic feet per day from the recently announced new contract, we expect to come online in the fourth quarter of 2026.

We expect double e, contracted volumes to be 1.215 BCF per day. In 2027 representing over 13% growth relative to 2025, which correspond to over 40 million of evict data, not to sum it.

As a reminder, if someone subscribes the full 1.5 BCF per day of free flow capacity, we would expect double e to generate approximately 50 million of ibaad met the summit.

During the quarterly average 712 million, cubic feet per day of throughput and average 745 million cubic feet per day during September.

The pain segment, reported adjusted Eva of 12.5 million. An increase of 2 million relative to the second quarter due primarily to realization of previously deferred revenue and lower operating expenses. Partially offset by approximately 1 and a half percent, decrease in volume throughput.

The midcom segment reported adjusted, Evita of 23.6 million. A decrease of 1.3 million relative to the second quarter primarily due to lower product margin. Partially offset by an increase in volume throughput.

6 in the Barnett, partially offset by natural production to coins.

Our key customer in the aroma is actively running a rig to execute on its 20, well development program, which we expect to drive 5 to 10 percent, volumetric growth in the aroma from 2025 to 2026.

There's currently 1 ring in the aroma and 1 in the Barnett with 18 ducks behind the system.

all of which 17 are expected to come online in 2026,

And with that, I'll turn the call back over to Heath for closing remarks.

Thanks Bill.

In summary, we're pleased with our third quarter performance in the continued momentum. We're seeing across the business, volumes are growing customers, remain active, and our balance sheet is strong.

We're also excited about the momentum in the business, with strong third-quarter results and significant expected activity in the fourth quarter. And for the first half of next year,

We plan to release full year, 2026 Financial guidance to our in our fourth quarter, earnings release and we'll continue to work with customers to firm up second half of the 26th development plan.

And with that operator, I'd like to open the call for questions.

As a reminder, to ask a question, please press star, 1, 1, 1 on your telephone and wait for your name to be announced to withdraw your question. Please press star, 1, 1, 1 again.

Again, as a reminder to ask a question. Please press star 1, 1 on your telephone and wait for your name to be announced to withdraw your question. Please. Press star 1 1 again.

This concludes today's conference call, thank you for participating. You may now disconnect