Q2 2026 Summit Midstream Corp Earnings Call

August 11, 2026

Operator: Good day, and welcome to the second quarter 2026 Summit Midstream Corporation Earnings Conference Call. At this time, all participants are in listen-only mode. After the speaker's presentation, there will be a question-and-answer session. To ask a question, you will need to press star one one on your touch-tone telephone. Please note this call is being recorded. I would like to turn the call over to Randall Burton. Please go ahead.

Speaker #1: To ask a question, you will need to press star one-one on your touch-tone telephone. Please note, this call is being recorded. I would now like to turn the call over to Randall Burton.

Speaker #1: Please go ahead.

Speaker #2: Thanks, operator, and good morning, everyone. If you don't already have a copy of our earnings release, please visit our website at summitmidstream.com, where you'll find it on the homepage, in the Events and Presentations section, or the Quarterly Results section.

Randall Burton: Thanks, operator, and good morning, everyone. If you do not already have a copy of our earnings release, please visit our website at summitmidstream.com where you will find it on the homepage, Events and Presentation section or Quarterly Results section. With me today to discuss our second quarter of 2026 financial and operating results is Heath Deneke, our President, Chief Executive Officer, and Chairman, and Bill Mault, our Chief Financial Officer, along with other members of our senior management team. Before we start, I would 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.

Speaker #2: With me today to discuss our second quarter of 2026 financial and operating results is Heath Deneke, our president, chief executive officer, and chairman, and Bill Mault, our chief financial officer, along with other members of our senior management team.

Speaker #2: 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.

Speaker #2: 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.

Randall Burton: 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 31 December 2025, which the company filed with the SEC on 16 March 2026, as well as our other SEC filings for a listing of factors that could cause actual results to defer 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. With that, I will turn the call over to Heath.

Speaker #2: Please see SMC's annual report on Form 10-K for the fiscal year end of December 31, 2025, which the company filed with the SEC on March 16, 2026, as well as our other SEC filings for a listing of factors that could cause actual results to defer materially from expected results.

Speaker #2: 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 through the most directly comparable GAAP measures in our most recent earnings release.

Speaker #2: And with that, I'll turn the call over to Heath.

Speaker #3: All right. Thanks, Randall, and good morning, everyone. On Summit announced strong second quarter results today with adjusted EBITDA of 60.7 million, which is a 12% increase relative to the first quarter.

Heath Deneke: All right. Thanks, Randall, and good morning, everyone. Well, Summit announced strong second quarter results today with adjusted EBITDA of $60.7 million, which is a 12% increase relative to the first quarter. The second quarter increase was driven by growth in both our Rockies and MidCon segments. As we look ahead to the rest of the year, we are very encouraged with the level of activity we are experiencing across our systems, and we are seeing our customers accelerate plans to bring on new wells that are expected to be turned in line towards the end of 2026. Additionally, as we will discuss further in the call, we have a lot of continued commercial momentum, in the Rockies and the Permian segments as we keep securing new contracts to support very attractive, high-returning expansion projects.

Speaker #3: The second quarter increase was driven by growth in both our Rockies and Midcon segments. And as we look ahead to the rest of the year, we are very encouraged with the level of activity we are experiencing across our systems and we're seeing our customers accelerate plans to bring on new wells that are expected to be turned in line towards the end of 2026.

Speaker #3: Additionally, as we'll discuss further in the call, we have a lot of continued commercial momentum. In the Rockies and the Permian segments, as we keep securing new contracts to support very attractive high-returning expansion projects.

Speaker #3: Touching on the second quarter a bit more, we turned in line 36 wells, 16 in the DJ, and 20 in the Midcon. Right after the quarter close, we brought on another 17 wells in the Willison.

Heath Deneke: Touching on the Q2 a bit more, we turned in line 36 wells, 16 in the DJ and 20 in the MidCon. Right after the quarter closed, we brought on another 17 wells in the Williston, and we now have roughly 75 drilled but uncompleted wells across the footprint. It is exciting to see our customers responding to the higher crude price environment, as we speculated could occur back in our earnings call back in May. We now have a total of eight rigs running behind our Rockies system, which by the way, is up from five in the previous quarter. Six of those rigs are in the Williston. I tell you, that is a level we are excited about we have not seen in several years in the basin. Part of that activity pickup in the Williston is existing customers accelerating their programs in a stronger crude environment.

Speaker #3: And we now have roughly 75 drilled but uncompleted wells across the footprint. It's exciting to see our customers responding to the higher crew price environment as we speculate it could occur back in our earnings call back in May.

Speaker #3: We now have a total of eight rigs running behind our Rocky system, which, by the way, is up from five in the previous quarter.

Speaker #3: And six of those rigs are in the Willison. And I'll tell you, that's a level we're excited about. We haven't seen in several years in the basin.

Speaker #3: So part of that activity pickup in the Willison is existing customers accelerating their programs and a stronger crew environment. But part of it is also our commercial success.

Heath Deneke: Part of it is also our commercial success. As we previously announced, we have secured two new gathering agreements in Divide County during the H1 of the year. Both of the new customers have a rig running behind the system today. As a result, we now have visibility to approximately 30 new well connections in the Williston that were not contemplated when we set our guidance for the year. These are weighted towards the Q4, so we do expect limited volume contribution in 2026, but they do position us for a very strong start as we look into 2027. In the DJ, we also see our customers ramping up plans that we expect will be a big catalyst for late 2026, early 2027 as well.

Speaker #3: As we previously announced, we've secured two new gathering agreements in Divide County during the first half of the year. Both of the new customers have a rig running behind the system today.

Speaker #3: And as a result, we now have visibility to approximately 30 new well connections in the Williston that were not contemplated when we set our guidance for the year.

Speaker #3: These are weighted towards the fourth quarter, so we do expect limited volume contribution in 2026, but they do position us for a very strong start as we look into 2027.

Speaker #3: In the DJ, we also see our customers ramping up plans that we expect will be a big catalyst for late '26, early '27 as well.

Speaker #3: We recently signed a new 20-year extension of a gathering and processing agreement with one of our existing anchor customers in the basin. And we're also working with other customers to potentially dedicate new acreage to our growing DJ footprint.

Heath Deneke: We recently signed a new 20-year extension of a gathering and processing agreement with one of our existing anchor customers in the basin, and we are also working with other customers to potentially dedicate new acreage to our growing DJ footprint. It is really an exciting time to see this level of activity ramping up in the Rockies segments and what that means for the future. On Double E, we executed additional firm transportation agreements during the quarter, which brought total contracted volume on the pipe to just over 1.9 Bcf per day. We continue to see a tremendous amount of customer interest in the mainline compression expansion open season, and we have extended that open season now through the end of August as we work to finalize additional firm transportation agreements that will support the project.

Speaker #3: It's really an exciting time to see this level of activity ramping up in the Rocky segments and what that means for the future. On EE, we executed additional firm transportation agreements during the quarter, which brought total contracted volume on the pipe to just over 1.9 BCF per day.

Speaker #3: We continue to see a tremendous amount of customer interest in the mainline compression expansion open season, and we have extended that open season now through the end of August as we work to finalize additional firm transportation agreements that will support the project.

Speaker #3: We expect to be in a position to make a final investment decision prior to the open season conclusion, and we will provide updates as they become available.

Heath Deneke: We expect to be in a position to make a final investment decision prior to the open season conclusion, and we will provide updates as they become available. Just to mention the MidCon segment, one of the highlights there is that we are very encouraged with the performance of new wells that have recently been turned in line in an emerging dry gas region within our Arkoma footprint. This again, is a development that could be a major catalyst for the segment in 2027 and beyond. Finally, before handing the call over to Bill, I would like to hit on guidance real quick. As we said, we have had a solid H1 in the books, and we now have a far better line of sight into H2 volumes than we did back in March with the activity level now accelerating as well across the footprint.

Speaker #3: And just to mention the Midcon segment, one of the highlights there is that we're very encouraged with the performance of new wells that have recently been turned in line in an emerging dry gas region within our Arkoma footprint.

Speaker #3: This, again, is a development that could be a major catalyst for the segment in 2027 and beyond. And finally, before handing the call over to Bill, I'd like to hit on guidance real quick.

Speaker #3: As we said, we've had a solid first half in the books, and we now have a far better line of sight into second half volumes than we did back in March with the activity level now accelerating as well across the footprint.

Speaker #3: So as a result, we are tightening our full year 2026 adjusted EBITDA guidance to a range of 235 million to 255 million. We are also raising full year capital expenditure guidance to 100 to 120 million, which is inclusive of the contributions to the EE JV.

Heath Deneke: So as a result, we are tightening our full year 2026 adjusted EBITDA guidance to a range of $235 million to $255 million. We are also raising full year capital expenditure guidance to $100 million to $120 million, which is inclusive of the contributions to the Double E JV. The first driver of that capital increase is the approximate 30 new wells that we talked about earlier in the call, which were not part of our original plan. As well as the second, I guess, would be the incremental capital at Double E, which is tied to the new firm transportation agreements that we executed this year. As a reminder, that Double E capital will be funded through our new term loans that we executed earlier in the year.

Speaker #3: I'll look—the first driver of that capital increase is the approximately 30 new wells that we talked about earlier in the call, which were not part of our original plan.

Speaker #3: As well as the second, I guess, would be the incremental capital at EE, which is tied to the new firm transportation agreements that we executed this year.

Speaker #3: As a reminder, those that EE capital will be funded through our new term loans that we executed earlier in the year. So, look, both of these increased expenditures are going to be really high-returning dollars and tied to activity that is either contracted or committed, and in both cases, we see that the earnings benefits will start showing up in 2027.

Heath Deneke: Both of these increases in expenditures are going to be really high returning dollars and tied to activity that is either contracted or committed. In both cases, we see that the earnings benefits will start showing up in 2027. With that, I would like to turn the call over to Bill now to walk through the financials.

Speaker #3: So with that, I'd like to turn the call over to Bill now to walk through the financials.

Speaker #2: Thanks, Steve. And good morning, everyone. Summit reported Q2 2026 adjusted EBITDA of $60.7 million, distributable cash flow of $36.8 million, and free cash flow of $9.4 million.

Bill Mault: Thanks, Heath, and good morning, everyone. Summit reported 2026 adjusted EBITDA of $60.7 million, distributable cash flow of $36.8 million, and free cash flow of $9.4 million. Total capital expenditures were $25 million for the quarter, inclusive of $4.1 million of maintenance CapEx, with the majority of capital directed toward pad connections in the Rockies and MidCon segments. With respect to Summit's balance sheet, we ended the quarter with $21 million of unrestricted cash and $79 million drawn on our revolver, with approximately $418 million of available borrowing capacity after accounting for $2.7 million of undrawn letters of credit. Total leverage at the end of the quarter was approximately 4.1 times, and the Summit Permian Transmission term loan had a balance of $350 million at quarter end and remains non-recourse to Summit.

Speaker #2: Total capital expenditures were 25 million for the quarter, inclusive of 4.1 million of maintenance capex. With the majority of capital directed toward pack connections in the Rockies and Midcon segments.

Speaker #2: With respect to Summit's balance sheet, we ended the quarter with 21 million of unrestricted cash and 79 million drawn on our revolver, with approximately 418 million of available borrowing capacity after accounting for 2.7 million of undrawn letters of credit.

Speaker #2: Total leverage at the end of the quarter was approximately 4.1 times, and the Summit Permian Transmission term loan had a balance of $350 million at quarter end and remains non-recourse to Summit.

Speaker #2: With all the commercial progress and our expectation to FID compression in the near term, we are also working with our financial partner at Summit Permian Transmission to secure the 50 million uncommitted accordion to support the compression expansion project.

Bill Mault: With all the commercial progress and our expectation to FID compression in the near term, we are also working with our financial partner at Summit Permian Transmission to secure the $50 million uncommitted accordion to support the compression expansion project. During the quarter, we also began executing on the $35 million share repurchase program authorized by the board, repurchasing approximately 35,000 shares for $1 million. As of 30 June, we had approximately $34 million of remaining capacity under the program. Now on to the segments. The Rockies segment generated adjusted EBITDA of $30.4 million, an increase of $4 million relative to the first quarter of 2026, driven by a 6.3% increase in liquids volume throughput and higher realized crude oil and NGL prices, partially offset by a 3% decline in natural gas volume throughput.

Speaker #2: During the quarter, we also began executing on the 35 million share repurchase program authorized by the board, repurchasing approximately 35,000 shares for a million dollars.

Speaker #2: As of June 30, we had approximately 34 million of remaining capacity under the program. Now onto the segments. The Rocky segment generated adjusted EBITDA of 30.4 million, an increase of 4 million relative to the first quarter of 2026, driven by a 6.3% increase in liquids volume throughput and higher realized crude oil and NGL prices partially offset by a 3% decline in natural gas volume throughput.

Speaker #2: Liquids volumes averaged 68,000 barrels per day and natural gas volumes averaged 162 million cubic feet per day during the quarter. Realized crude oil prices and composite NGL prices were both up approximately 30%, quarter over quarter, but exceeding both our customers and Summit's earnings associated with percentage of proceed contracts in the DJ basin.

Bill Mault: Liquids volumes averaged 68,000 barrels per day, and natural gas volumes averaged 162 million cubic feet per day during the quarter. Realized crude oil prices and composite NGL prices were both up approximately 30% quarter-over-quarter, benefiting both our customers and Summit's earnings associated with percentage of proceed contracts in the DJ Basin. We connected 16 wells in the DJ Basin during the quarter, and subsequent to quarter end, we connected an additional 17 wells in the Williston Basin, including nine wells for which we provide both crude oil and produced water gathering services. Just as a reminder, the water to crude ratio in this area of the Williston is approximately 3 barrels to 1. So these wells are extremely impactful to volume throughput.

Speaker #2: We connected 16 wells in the DJ basin during the quarter and subsequent to quarter end, we connected an additional 17 wells in the Williston basin including 9 wells for which we provide both crude oil and produced water gathering services.

Speaker #2: And just as a reminder, the water-to-crude ratio in this area of the Williston is approximately 3 barrels to 1. So these wells are extremely impactful to volume throughput.

Speaker #2: While those 9 wells are still ramping, through August to date, they've averaged approximately 15,000 barrels per day of combined crude and produced water throughput.

Bill Mault: While those nine wells are still ramping, through August to date, they've averaged approximately 15,000 barrels per day of combined crude and produced water throughput. We are excited about the growth trajectory of this segment, not only from the acceleration of activity, but continued delineation and development of the significant remaining inventory in both Williams and Divide counties. Additionally, in the DJ, Peoria Resources, who entered the basin acquiring Verdad earlier this year, announced the acquisition of Fundera Resources last week. As you know, Fundera is a key customer behind the Moonrise Midstream asset that we acquired back in March of 2025, and this transaction offers Peoria additional contiguous acreage to drill longer laterals, drive down breakevens, and fully develop the resource behind the Moonrise processing plant. There are 8 rigs currently running behind the systems, 6 in the Williston and 2 in the DJ, with approximately 75 docks.

Speaker #2: We are excited about the growth trajectory of this segment, not only from the acceleration of activity, but also from the continued delineation and development of the significant remaining inventory in both Williams and Divide counties.

Speaker #2: Additionally, in the DJ, Peoria Resources, who entered the basin, acquiring Verdad earlier this year, announced the acquisition of Fundayo Resources last week, as you know, Fundayo is a key customer behind the Moonrise Midstream asset that we acquired back in March of 2025, and this transaction offers Peoria additional contiguous acreage to drill longer laterals drive down break evens and fully develop the resource behind the Moonrise crossing plan.

Speaker #2: There are 8 rigs currently running behind the systems, 6 in the Williston and 2 in the DJ, with approximately 75 tugs. The Permian segment reported adjusted EBITDA of 9.4 million and increase of 0.6 million relative to the first quarter, driven by a 6.7% increase in EE volume throughput with EE averaging 859 million cubic feet per day of throughput during the quarter.

Bill Mault: The Permian segment reported adjusted EBITDA of $9.4 million, an increase of $0.6 million relative to the first quarter, driven by a 6.7% increase in Double E volume throughput, with Double E averaging 859 million cubic feet per day of throughput during the quarter. The Piceance segment reported adjusted EBITDA of $8.7 million, a decrease of $0.9 million relative to the first quarter, primarily due to a 5.7% decline in volume throughput driven by continued temporary shut-ins from low regional gas prices, natural production declines, and no new well connections during the quarter. However, as of the end of July, all of the previously shut-in production had begun flowing. Finally, the MidCon segment reported adjusted EBITDA of $21.4 million, an increase of $2 million relative to the first quarter, primarily due to a 9.9% increase in natural gas volume throughput to 523 million cubic feet per day.

Speaker #2: The Peonce segment reported adjusted EBITDA of 8.7 million a decrease of 0.9 million relative to the first quarter, primarily due to a 5.7% decline in volume throughput driven by continued temporary shut-ins from low regional gas prices, natural production declines, and no new well connections during the quarter.

Speaker #2: However, as of the end of July, all of the previously shut-in production had begun flowing. Finally, the Midcon segment reported adjusted EBITDA of 21.4 million and increase of 2 million relative to the first quarter, primarily due to a 9.9% increase in natural gas volume throughput to 523 million cubic feet per day.

Speaker #2: This was driven by 17 new Barnett wells and 3 new Arkoma well connections during the quarter. These wells are either performing in-line or slightly above our expectations and we are encouraged with how long these wells are holding production before starting their initial declines.

Bill Mault: This was driven by 17 new Barnett wells and 3 new Arkoma well connections during the quarter. These wells are either performing in line or slightly above our expectations, and we are encouraged with how long these wells are holding production before starting their initial declines. With that, I'll turn the call back over to Heath for closing remarks.

Speaker #2: And with that, I'll turn the call back over to Heath for closing remarks.

Speaker #3: All right. Thanks, Bill. So to wrap up, we are very excited about the trajectory of the business through the remainder of '26 and into '27 as well.

Heath Deneke: All right. Thanks, Bill. To wrap up, we are very excited about the trajectory of the business for the remainder of 2026 and into 2027 as well. Volumes are growing and customer activity behind our systems is accelerating. As we have laid out in our recent investor presentation, the business is poised to deliver over $100 million of organic growth by 2030, which is driven by the Rockies and Permian segments primarily. Look, all of this you can see materializing real-time when you look at the commercial success that we are having, along with the development activity levels that we are experiencing. Our current focus is completing a successful conclusion to the Double E compression expansion open season in the coming weeks, as well as staying ahead of our customers in the Rocky segment with our Well Connect programs that will enable our customers to even maybe further accelerate their development activity.

Speaker #3: Volumes are growing and customer activity behind our systems is accelerating. And as we've laid out in our recent investor presentation, the business is poised to deliver over a 100 million of organic growth by 2030, which is driven by the Rockies and Permian segments primarily.

Speaker #3: Look, all of this you can see materializing real-time when you look at the commercial success that we're having along with the development activity levels that we're experiencing.

Speaker #3: Our current focus is completing a successful conclusion to the EE compression expansion open season in the coming weeks, as well as staying ahead of our customers in the Rocky segment with our well connect programs that will enable our customers to even maybe further accelerate their development activity.

Speaker #3: On the corporate front, we continue to make progress towards achieving our 3 and a half times leverage target and making our goal of resuming a common dividend in the near future a reality.

Heath Deneke: On the corporate front, we continue to make progress towards achieving our 3.5x leverage target and making our goal of resuming a common dividend in the near future a reality. We think the combination of Summit's robust growth outlook, our current and projected high free cash flow yield, our improving balance sheet, and our current valuation all provide a very clear and compelling value proposition for new and existing investors in Summit. With that, I would like to thank everyone for joining the call, and I look forward to answering questions. Operator, please open the call for questions.

Speaker #3: We think the combination of Summit's robust growth outlook, our current and projected high-free cash flow yield, our improving balance sheet, and our current valuation all provide a very clear and compelling value proposition for new and existing investors in Summit.

Speaker #3: So with that, I would like to thank everyone for joining the call, and I look forward to answering questions. Operator, please open the call for questions.

Speaker #4: Thank you. As a reminder, if you'd like to ask a question, please press star 11. If your question has been answered and you'd like to remove yourself from the queue, press star 11 again.

Operator: Thank you. As a reminder, if you would like to ask a question, please press star 1 1. If your question has been answered and you would like to remove yourself from the queue, press star 1 1 again. Our first question comes from Mark Reichman with Noble Capital Markets. Your line is open.

Speaker #4: Our first question comes from Mark Reachman with Noble Capital Markets. Your line is open.

Speaker #5: No.

Speaker #6: Thank you. How much incremental adjusted EBITDA could the 30 new Williston well connections contribute in 2027? And how should we think about the broader growth opportunity in the basin beyond those wells?

Mark Reichman: Thank you. How much incremental adjusted EBITDA could the 30 new Williston pad connections contribute in 2027, and how should we think about the broader growth opportunity in the basin beyond those wells?

Speaker #5: Yeah, good morning, Mark. Thanks for joining. So the 30 incremental wells, we're talking about, Mark, I would view that as somewhere around 10 million dollars of kind of EBITDA contribution just from that development.

Bill Mault: Yeah. Good morning, Mark. Thanks for joining. The 30 incremental wells we are talking about, Mark, I would view that as somewhere around $10 million of kind of EBITDA contribution just from that development. Now, obviously, those 30 wells are coming online, call it late Q4, early Q1. We would expect additional activity to transpire for the remainder of 2027 in the Williston. It is a little early, relative to producer guidance. If you just think about that 15,000 barrel a day increase from the nine crude and water wells, we are talking about sizable volumetric growth, relative to kind of the print this quarter on liquids volume. We have talked about some of that volumetric sensitivity that we include in our investor deck.

Speaker #5: Now, obviously, those 30 wells are coming online, call it late Q4, early Q1. We would expect additional activity to transpire for the remainder of ’27 in the Williston.

Speaker #5: It's a little early relative to producer guidance, but if you just think about that 15,000 barrel-a-day increase from the nine crude and water wells, we're talking about sizable volumetric growth relative to kind of the print this quarter on liquids volume.

Speaker #5: So we've talked about some of that volumetric sensitivity that we include in our investor deck. I think what we're seeing we're trending towards that higher end of the call it 10-ish percent kind of volumetric growth under this type of cadence.

Bill Mault: I think what we are seeing, we are trending towards that higher end of the, call it 10-ish percent kind of volumetric growth under this type of cadence.

Speaker #6: And then.

Heath Deneke: Then-

Heath Deneke: Mark, just one other thought to add there as well. If you think about the producers behind these new, we signed, what, 240,000 acres worth of new dedications to the system in the H1 of the year. A lot of their plans were developed off of a crude strip that was materially below where we are now. I think, if crude holds kind of in this current range that we are in now, I would actually expect to probably see some additional acceleration or maybe additional rigs being added on the acreage position. We think we have a lot of upside. Also, just given our position in Divide and Northern Williams County, I think we have got additional targets out there that we think we may be able to bolt on some additional customers as well.

Speaker #5: Mark, just one other thought to add there as well. I mean, if you think about when these the producers behind these new we signed, what, 240,000 acres worth of new dedications to the system in the first half of the year, and a lot of their plans were developed off of a crude strip that was materially below where we are now.

Speaker #5: So I think if crude holds kind of in this current range that we're in now, I would actually expect to probably see some additional acceleration or maybe additional rigs being added on the acreage position.

Speaker #5: So, a lot of, and we think we have a lot of upside. And also, just given our position in Divide and northern Williams County, I think we've got additional targets out there that we think we may be able to bolt on some additional customers as well.

Speaker #5: So, pretty exciting growth up here in the Williston. Good to see on our system.

Heath Deneke: So pretty exciting growth up here in the Williston, and good to see on our system.

Speaker #6: Well, that's very helpful. Now, what remaining commercial commitments are necessary to reach FID on the EE Compression Expansion? And I'm just looking at that slide in your slide deck on page 7 where you kind of step through the volumes and the financial contribution.

Mark Reichman: Well, that's very helpful. Now, what remaining commercial commitments are necessary to reach FID on the Double E compression expansion? I am just looking at that slide in your slide deck on page 7, where you kind of step through the volumes and the financial contribution. So maybe you could talk a little bit about that and maybe the incremental EBITDA that you expect if the project proceeds.

Speaker #6: So maybe you could talk a little bit about that and maybe the incremental EBITDA that you expect if the project proceeds.

Speaker #2: Yeah, Mark. This is Chris Tennant. I appreciate the question. We're putting the final touches on two PA agreements right now that'll push us over the FID hurdle here in the next couple of weeks.

Chris Tennant: Yeah, Mark, this is Chris Tennant. I appreciate the question. We are putting the final touches on two FTA agreements right now that will push us over the FID hurdle here in the next couple of weeks. The FID case will give us right at a sub 6 times build multiple. The asset is in a great position, and we feel very confident about fully contracting it. As we contract the remaining capacity, we will see that build multiple go to a 3x or lower build multiple. So we are really excited about that and feel very confident in our contracting and the position around Double E.

Speaker #2: And the FID case will give us right out a sub-6 times build multiple. The asset is in a great position and we feel very confident about fully contracting it.

Speaker #2: And as we contract the remaining capacity, we'll see that build multiple go to a 3x or lower build multiple. So we're really excited about that and feel very confident in our contracting and the position around EE.

Speaker #5: And Mark, to bridge the gap on kind of the page you're looking at in the investor deck, we're showing about $70 million of existing contracts and then, with compression, $90-plus million of EBITDA.

Bill Mault: Mark, to bridge the gap on kind of the page you are looking at in the investor deck. We are showing kind of 70 million of existing contracts, and then with compression, 90+ million of EBITDA. Think about that FID case being somewhere kind of in between those, to get kind of baseline economics for us to make the decision to FID. Then the goal and our expectation would be to fully commercialize the remaining capacity by the end of the year.

Speaker #5: Think about that FID case being somewhere kind of in between those. To get kind of baseline economics for us to make the decision to FID and then the goal and our expectation would be to fully commercialize the remaining capacity by the end of the year.

Speaker #6: Okay, that's really helpful. And then, with the Pion's NBC shortfall payments expiring at the end of the third quarter, how should we think about the segment's normalized EBITDA beginning in the fourth quarter and into 2027?

Mark Reichman: Okay. That is really helpful. With the Piceance MVC shortfall payments expiring at the end of Q3, how should we think about the segment's normalized EBITDA beginning in Q4 and into 2027? I was just kind of wondering if the return of the previously shut-in production and future drilling might offset the loss of the MVC-related earnings, or should we expect a step down in cash flow?

Speaker #6: I was just kind of wondering if the return of the previously shut in production and future drilling might offset the loss of the NBC related earnings or should we expect a step down in cash flow?

Speaker #5: Yeah, Mark, you should expect a step-down in cash flow starting in the fourth quarter. And just to provide some high-level numbers, think of that as roughly $4 million of shortfall payments per quarter.

Bill Mault: Yeah. Mark, you should expect a step down in cash flow starting Q4. Just to provide some high-level numbers, think of that as like there is roughly $4 million of shortfall payments a quarter.

Speaker #5: So the business, that segment did around 8.5, 8.6 million this quarter. So you're somewhere around 4 to 4.5 million of kind of flowing EBITDA, which will give you a good run rate for '27.

Bill Mault: So that segment did around 8.5, 8.6 million this quarter. So you are somewhere around 4 to 4.5 million of kind of flowing EBITDA, which will give you a good run rate for 2027. Longer term, Mark, and we can get into this in more detail if you would like, but longer term, in our long-term outlook, the $100 million of EBITDA growth through 2030, we are really not expecting any development in the Piceance under that forecast. I do think that is conservative. I think there are things like the data center build-out, in that entire kind of Rockies area as well as Canadian LNG. We really need some gas demand to kind of offset some of the Canadian associated gas that is flooding the market in which these producers sell into on the residue gas side.

Speaker #5: Longer term, Mark—so we can get into this in more detail if you'd like—but longer term, in our long-term outlook, the $100 million of EBITDA growth through 2030, we're really not expecting any development in the peons under that forecast.

Speaker #5: I do think that's conservative. I think there are things like the data center build-out in that entire kind of Rockies area, as well as Canadian LNG. We really need some gas demand to offset some of the Canadian associated gas that's flooding the market, in which these producers sell into on the residue gas side.

Speaker #5: There's a lot of inventory. There's a lot of upside, but we're not banking on it in our long-term outlook. But I do think we're being a bit conservative long-term from that perspective.

Bill Mault: There is a lot of inventory, there is a lot of upside, but we are not banking on it in our long-term outlook. But I do think we are being a bit conservative long term from that perspective.

Speaker #6: Okay. And then on the so just at EBITDA for the first half was 115 million. And you narrowed your guidance to midpoint remains kind of 245 million.

Mark Reichman: Okay. Adjusted EBITDA for the H1 was USD 115 million, and you narrowed your guidance. The midpoint remains kind of USD 245 million. What could drive results towards the upper end of the range or even the lower end of the range? It is a pretty tight range to begin with, I guess.

Speaker #6: So what could drive results towards the upper end of the range or even the lower end of the range? I mean, it's a pretty tight range to begin with, I guess.

Speaker #5: Yeah. Mark, this is Heath. Look, I think we kind of we think we're kind of at the midpoint plus is how we describe the way things are set up right now.

Heath Deneke: Yeah. Mark, this is Heath. Look, we think we are kind of at the midpoint plus, is how I would describe the way things are set up right now. The low end, I would say, there would have to be a pretty dramatic drop in commodity values. Most of the activity, frankly, even Q3 activity, a lot of that is already been turned online or about to be turned online. The Q4 wells are really slanted more towards December than they are early in the quarter. I think activity-wise, I think we are pretty nailed down here.

Speaker #5: On the low end, I would say there would have to be a pretty dramatic drop in commodity values. Most of the activity, frankly—even third-quarter activity—a lot of that's already been turned online or is about to be brought online. The fourth-quarter wells are really slanted more towards December than they are early in the quarter.

Speaker #5: So, I think activity-wise, we’re pretty, pretty nailed down here. So I guess if we had some significant underperformance of wells, that might kind of skew the numbers down a little bit.

Heath Deneke: I guess, if we had some significant underperformance of wells, that might kind of skew the numbers down a little bit. I think we have got upside beyond the midpoint, and that probably more than offsets any kind of risk to the downside, in my view. Lots of good momentum here to hold on to.

Speaker #5: But I kind of think we've got upside beyond that, which offsets any kind of risk to the downside in my view. So, lots of good momentum here to hold on to.

Speaker #6: Yeah. So I was glad to see the I was encouraged to see the rebound in the midcon compared to the first quarter of this year.

Mark Reichman: Yeah. I was encouraged to see the rebound in the MidCon compared to the Q1 of this year. The last question I have is just-

Speaker #6: But so the last question I have.

Heath Deneke: Those are the dry gas wells, by the way.

Speaker #5: Well, by the way. I said those were the I said those were the dry gas wells, by the way. They came online. It really kind of pushed volumes up just by the way.

Mark Reichman: Huh?

Heath Deneke: I said those were the dry gas wells, by the way. They came online. They really kind of pushed volumes up, just by the way.

Mark Reichman: Yeah.

Speaker #5: Really excited about those. They're big wells. Yeah. And Mark, that's something like as you think about the sensitivity for 2026, what is pretty compelling so far and look, a handful of the wells have been on for, call it, two, three months now.

Heath Deneke: Really excited about those. They're big wells.

Bill Mault: Yeah. Mark, that's something like, as you think about the sensitivity for 2026, what is pretty compelling so far. Look, a handful of the wells have been on for, call it 2, 3 months now, but they're really hanging in. We haven't seen the initial decline profile kickoff yet. So, it's encouraging. They're big wells. I do think it really illustrates the earnings potential of that segment with pretty modest amount of activity.

Speaker #5: But they're really hanging in. We haven't seen that kind of the initial kind of decline profile kick off yet. So it's encouraging. They're big wells.

Speaker #5: And I do think it really illustrates the earnings potential of that segment with a pretty modest amount of activity.

Mark Reichman: Yes.

Heath Deneke: Based on the rigs, yeah.

Mark Reichman: All right. Now, the last question I have is, how do you kind of rank debt reduction, organic growth investment, share repurchases, and then the potential reinstatement of the common dividend, when you're thinking about allocating incremental free cash flow? I know your longer-term leverage target's 3.5. I think you were at 4.1 at the quarter end. What might be your medium-term leverage target?

Speaker #6: All right. Now, the last question I have is just how do you kind of rank debt reduction organic growth investment share repurchases and then the potential reinstatement of the common dividend when you're thinking about allocating incremental free cash flow and I know your longer-term leverage targets three and a half.

Speaker #6: I think you were at 4.1 at the quarter end. What might be your medium-term leverage target?

Speaker #5: Yeah. Well, look, I think you actually got the order correct. In terms of how we think about them, Mark, I think definitely getting to our leverage target which look, we continue to feel really good about.

Heath Deneke: Well, look, I think you actually got the order correct in terms of how we think about them, Mark. I think definitely, getting to our leverage target, which, look, we continue to feel really good about. If the momentum picks up or continues like what we're seeing right now and the activity levels behave as we do, I think in 2028, we could potentially get there. There are a few catalysts that could even accelerate that, but somewhere we think in the next 18 months is not an unreasonable assumption in terms of getting to our target. But look, we do have a lot of growth opportunity, and I do think that that's something that we are focused on. I think, fortunately, with Double E, ton of growth going on there, but we've got all of that capital already spoken for in a term loan that we put downstairs.

Speaker #5: I mean, if the momentum picks up or continues like what we're seeing right now and the activity levels behave as we do, I think in '28, we could potentially get there.

Speaker #5: There are a few catalysts that could even accelerate that. But somewhere we think in the next 18 months is not an unreasonable assumption in terms of getting to our target.

Speaker #5: But look, we do have a lot of growth opportunity and I do think that that's something that we are focused on. I think fortunately with EE, ton of growth going on there, but we've got all of that capital already spoken for in a term loan that we put downstairs.

Speaker #5: So we don't expect to see a big ramp up in our base business or our non-EE capital. It probably will hang in there in around the 50-ish mark or so.

Heath Deneke: We don't expect to see a big ramp-up in our base business or our non-Double E capital. It probably will hang in there in around the 50-ish mark or so. I think we're going to see some continued high free cash flow kind of coming out, continuing to pay down debt. Yeah, I think we're eager to kind of get a return on capital program underway here.

Speaker #5: So I think we're going to see some continued high free cash flow kind of coming out, continuing to pay down debt. And yeah, I think we're eager to kind of get a return of capital program underway here.

Speaker #5: So we're definitely focused on it. And Mark, if you think about it—so, obviously, we think the stock is undervalued, particularly when you take into context trading multiples relative to our peers.

Bill Mault: Yes

Heath Deneke: we are definitely focused on it.

Bill Mault: Mark, obviously, we think the stock is undervalued, particularly when you take into context trading multiples relative to our peers. The balancing act here, we think that, obviously, scale, getting leverage to our target, turning on dividend policy are more meaningful ways to bridge that value gap versus just buying back stock out of the market. Think about it as what we think has the potential to drive a more intrinsic value of the stock longer term. That buyback program is truly just giving some of the float and liquidity, is really there to help support in downside days. Right? When the Iran conflict, when they got to resolution a month or so ago, there was a lot of volatility in the energy sector. That is when we put that buyback program to work and help support the stock and provide some liquidity to investors.

Speaker #5: And the balancing act here we think that obviously scale getting leverage to our target, turning on dividend policy, are more meaningful ways to bridge that value gap versus just buying back stock out of the market.

Bill Mault: versus just buying back stock out of the market. Think about it as what we think has the potential to drive a more intrinsic value of the stock longer term. That buyback program is truly just giving some of the float and liquidity, is really there to help support in downside days. Right? When the Iran conflict, when they got to resolution a month or so ago, there was a lot of volatility in the energy sector. That is when we put that buyback program to work and help support the stock and provide some liquidity to investors.

Speaker #5: So think about it as what we think has the potential to drive kind of a more intrinsic value of the stock, longer term. And that buyback program is truly just given some of the float and liquidity, is really there to help support in downside days, right?

Speaker #5: So, when the Iran conflict got to a resolution a month or so ago, there was a lot of volatility in the energy sector.

Speaker #5: That's when we put that buyback program to work and kind of help support the stock and provide some liquidity to investors. Hey, and Mark, just—sorry, just to make sure I was clear, because I think I said '28,' but what I meant to say, and what I hoped I said, was the next 12 to 18 months.

Heath Deneke: Hey, Mark, sorry, just to make sure I was clear, because I think I said '28. What I meant to say and what I hoped I said was the next 12 to 18 months. Think about towards the mid-half, second half of 2027 to the first half of 2028 is, I think, when we expect to get there.

Speaker #5: So kind of think about towards the mid-half, second half of '27 to the first half of '28 is I think when we expect to get there.

Speaker #6: Okay. No, that's very helpful. Well, thank you very much. I really appreciate it.

Mark Reichman: Okay. No, that's very helpful. Well, thank you very much. I really appreciate it.

Speaker #2: Thank you. Our next question comes from Jason Gableman with TD Cowen. Your line is open.

Operator: Thank you. Our next question comes from Jason Gabelman with TD Cowen. Your line is open.

Speaker #3: Yeah. Hey, thanks for taking my questions. First, just on the full year EBITDA guide, I'm wondering if the second half guide contemplates any of the commodity strength we've seen the first half of the year.

Jason Gabelman: Yeah. Hey, thanks for taking my questions. First, just on the full year EBITDA guide. I'm wondering if the H2 guide contemplates any of the commodity strength we've seen the H1 of the year.

Speaker #5: Yeah, so good question, and thanks for joining, Jason. I'd tell you to think about it in, call it, the high 70s on crude-ish and kind of a normalized NGL.

Bill Mault: Yeah. So good question and thanks for joining, Jason. I'd tell you that, think about it in, call it the 70s on crude-ish and kind of a normalized NGL. We tend to update with strip, but if we're continuing to see pressure on that crude price to the upside, that's another example, Jason, of what could push us towards the higher end of the range on our tightened range.

Speaker #5: We tend to update with strip, but if we're continuing to see kind of pressure on that crude price to the upside, that's another example, Jason, of what could push us toward the higher end of the range on our tightened range.

Jason Gabelman: Mm-hmm. Got it. Going back to the Williston and encouraging to see the additional rigs being added to your acreage. Do you have a sense of your producer customer sensitivity to commodity prices? It has obviously been a really volatile tape, but if oil prices

Speaker #3: Got it. And then going back to the Bakken and encouraging to see the additional rigs being added to your acreage, do you have a sense of kind of your customers your producer customer sensitivity to commodity prices?

Speaker #3: It's obviously been a really volatile tape, but if oil prices kind of trend back down to 70 to 75, would you expect to sustain the same amount of rig activity?

Bill Mault: Yeah

Jason Gabelman: kind of trend back down to $70 to $75, would you expect to sustain the same amount of rig activity?

Speaker #5: Yeah. I don't think 70 to 75, Jason, really moves the needle from a development perspective. We are putting capital work out here. I tell you, our team does a lot of work on half-cycle returns and not at kind of the banker 10% type PVs.

Bill Mault: Well, I do not think $70 to $75, Jason, really moves the needle from a development perspective. We are putting capital work out here. I tell you, our team does a lot of work on half-cycle returns and not at the banker 10%-type PVs. We are talking 20%, 30% returns we think are doable in, call it the mid to high, call it 50s, 55 to maybe low 60s for that acreage. You have to remember, a lot of what they are doing up there are 3-mile laterals, so they are getting improved efficiencies on their breakevens and their D&C costs, which is really enabling this acreage and probably the lockstep change of what we have seen out here over the past 3, 4 years.

Speaker #5: We're talking 20, 30 percent returns. We think are doable in, call it, the mid to high, call it, 50s, 55 to maybe low 60s for that acreage.

Speaker #5: And you’ve got to remember, a lot of what they’re doing up there are three-mile laterals. So they’re getting improved efficiencies on their break-evens and their D&C costs, which is really enabling this acreage and probably the lockstep change in what we’ve seen out here over the past three or four years.

Jason Gabelman: Mm-hmm. Maybe one follow-up on the M&A landscape. Just curious on your thoughts on what you are seeing on bolt-on opportunities, particularly in the Rockies region, both the DJ and the Williston.

Speaker #3: And then maybe one follow-up on the M&A landscape, just curious on your thoughts on what you're seeing on Bolt-On opportunities, particularly in the Rockies region, both the DJ and the Bakken.

Speaker #5: All right. Look, as a general comment, I would tell you we're pretty disciplined on the M&A front. We've got a lot of organic growth ahead.

Heath Deneke: Look, a general comment, I would tell you. We're pretty disciplined on the M&A front. We've got a lot of organic growth ahead. We're certainly mindful of achieving our leverage target. And we have seen some M&A get a little frothy, frankly. We participated in some processes, and we stayed disciplined and let some assets go that we would've liked to have. But I definitely feel like it's, opportunistically, just given our portfolio and how many adjacent systems that we touch that are owned by private sponsors that are going to be looking to get out. I think it's inevitable that we'll find a good deal out there. But frankly, we're probably more excited about the organic growth profile and Double E and potentially some additional organic opportunities that we're in the midst of developing that provide growth beyond what we're even forecasting in our longer-term outlook.

Speaker #5: We're certainly mindful of achieving our leverage target. And we have seen some M&A get a little frothy, frankly. We participated in some processes, and we stayed disciplined and let some assets go that we would have liked to have.

Speaker #5: But I think I definitely feel like it's opportunistically—I mean, just given our portfolio and how many adjacent systems that we touch that are owned by private sponsors that are going to be looking to get out—I think it's inevitable that we'll find a good deal out there.

Speaker #5: But frankly, we're probably more excited about the organic growth profile in EE and potentially some additional organic opportunities that we're in the midst of developing that provide growth beyond what we're even forecasting in our longer-term outlook.

Speaker #3: All right. Great. Thanks for the answers, guys.

Jason Gabelman: All right. Great. Thanks for the answers, guys.

Speaker #5: You bet. Thank you.

Heath Deneke: You bet.

Speaker #4: Thank you. Thanks for picking us up, too.

Bill Mault: Thank you.

Heath Deneke: Thank you.

Bill Mault: Thanks for picking us up, too.

Operator: Thank you for your participation. This does conclude the question and answer session, and you may now disconnect. Everyone, have a great day.

Q2 2026 Summit Midstream Corp Earnings Call

Request DemoDemo

Summit Midstream

Earnings