Summit Midstream Corporation

Ladies and gentlemen, thank you for standing by. Welcome to the Summit Midstream Corporation fourth quarter 2024 earnings conference call. At this time, all 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 would need to press star 11 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star 11 again. Please be advised that today's conference is being recorded. I would like now to turn the conference over to Randall Burton. 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 www.summitmidstream.com, where you'll find it on the homepage, events and presentation section, or quarterly results section. With me today to discuss our fourth quarter of 2024 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 quarterly report on Form 10-Q for the quarterly period ended September 30, 2024, which the company filed with the SEC on November 12, 2024, our 2024 annual report on Form 10-K, which will be filed soon, as well as our other SEC filings for listing 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.

Thanks, Rendell, and good morning, everyone. Thank you for joining us today to discuss our fourth quarter and full year 24 results. Summit had a very active and transformational year in 24, As we entered the year, we were midway through a very thorough strategic alternatives review to determine the best path forward to maximize unit holder value. After careful consideration of the alternatives, we elected to pursue a series of transactions and a corporate strategy that we believe would deliver significant value for our unit holders in 2024 and beyond. The first step was the decision to divest the Northeast segment for $700 million in total cash proceeds. which immediately reduced leverage from 5.4 times to 3.9 times and drove an increase in our unit price from around $17 a unit at the beginning of the year to nearly $30 a unit shortly after announcing the transaction. Following that, in July of 24, we successfully refinanced the balance sheet with an upsized credit facility and used second lien notes. This significantly increased our financial flexibility, it reduced our interest expense, and extended our nearest maturity out to 2029. Then in August, with the support from our unit holders, we simplified our corporate structure by converting from a master limited partnership to a C-Corp, which broadened our investor base and significantly improved our overall trading liquidity. Following these series of transactions, Summit emerged in the third quarter of 2024 with a strong balance sheet, a simplified corporate structure that made our equity easier to own, and with ample liquidity and a higher valued equity currency, to pursue our corporate strategy to rebuild scale through value and credit accretive transactions. Then, during the fourth quarter, we executed on that corporate strategy by signing and closing the value and credit accretive acquisition of tall oak midstream in the Arcoma Basin. We financed the tall oak acquisition through a combination of cash and stock, which not only materially increased our size and scale, but importantly increased Summit's exposure to natural gas oriented basins that are strategically positioned to ramp up production in coming years to feed the high growth markets and LNG exports in the Gulf Coast region. The execution of our corporate plans and strategy in 24 resulted in significant value creation for our shareholders as our share price more than doubled by the end of the year. While we were obviously pleased with our achievements throughout the year and the resulting performance in our share price, we believe there's a lot more value creation ahead as we maintain our financial discipline and continue to execute on our corporate strategy in the coming years. Our momentum has continued to build as we enter into 2025. In January, we closed on a $250 million add-on to the existing second lien notes, terming out our revolver borrowings and replenishing our liquidity to continue executing on our consolidation strategy. In February, with the ongoing progress we've made on delivering the balance sheet, we announced plans to reinstate the cash dividend on the corporate Series A preferred beginning on March 15th of 25, which is a necessary step towards resuming a common dividend in the future. And yesterday, we were pleased to announce another value accretive and strategic bolt-on acquisition of Moonrise Midstream in the DJ Basin, which further expands Summit's gathering and processing capacity in the area at a crucial time as volumes behind our existing DJ assets continue to grow. We purchased the system at approximately a five times 2024 EBITDA multiple and financed a $90 million transaction utilizing roughly a turn of equity and four turns of cash. Moonrise adds 65 million a day of processing capacity to the system, approximately half of which is currently available to support continued growth behind our DJ super system in the coming years. The Moonrise system is already connected with our existing DJ assets via multiple pipe interconnects, and we expect to extract significant operational and commercial synergies in 2025 and beyond with a combined operating footprint. We remain very excited about the growth trajectory of Summit's existing DJ Basin position and our ability to capture additional value, accretive opportunities in the year ahead. Moving on to our fourth quarter in 2024, our financial results were in line with management expectations. Summit delivered fourth quarter adjusted EBITDA of $46.2 million and full year 24 adjusted EBITDA of $204.6 million. During the year, we generated more than $85 million of distributable cash flow. We experienced a consistent level of well connects throughout the year, with 156 new wells connected in total. In the Barnett, which is now included in our MidCon segment, we connected 27 new wells to the system, exceeding our original expectations, which led to a roughly 80% volumetric growth from Q4 of 23 to Q4 of 24. We're expecting similar levels of development in 25 in the Barnett, and with an active rig running behind our Coma system, We're set up for another strong year of growth in the MidCon region. In the Rockies region, we connected 129 new wells to the system with 37 wells in the Williston and 92 wells in the DJ. This level of activity led to 5% volume growth in the DJ Basin from Q4 of 23 to Q4 of 24. As we mentioned in the DJ operational update yesterday, we are nearing full utilization of capacity in certain areas of our footprint. which has led to some of our customers electing to moderate or defer development activity behind our system in 25. However, with the acquisition of Moonrise, we do expect to resolve those capacity constraints and expect to see activity levels continue to increase behind our DJ systems in 26 and beyond. And lastly, we saw tremendous volume throughput growth on EE, increasing volumes by roughly 60% from the fourth quarter of 23 to the fourth quarter of 24. We continue to remain confident in our ability to fill up the existing and contracted capacity with long-term take-or-pay contracts. So 2024 was a solid year for Summit operationally, and with a supportive commodity price environment, we're looking forward to another strong year ahead. I'll now briefly hit on our 25 plan and guidance range, and then we'll turn it over to Bill to discuss in more details in his section. We announced full year 25 adjusted EBITDA guidance of $245 million to $280 million. which is inclusive of our recent Moonrise acquisition. We expect to connect 125 to 185 wells to the system in 2025. Similar to previous years, our guidance range incorporates real-time feedback we are receiving from our customers regarding their development plans, and we are tracking rigs and completion crews and permits to ensure that well connects remain on track in 2025. So just as a refresher to our risking and guidance methodology, if our producers hit their current turn-in-line dates, and production targets, we expect to be at the high end of our adjusted EBITDA guidance range in 2025. The low end of our range reflects roughly a 30% reduction in planned well connectivity in 2025, mainly due to risking the timing of wells that are slated to come online in the third and fourth quarters and delaying those into 2026. We will continue to keep an eye on activity levels in and around our system and will provide updates throughout the year. Our 2025 capital guidance ranges from $65 to $75 million this year, which includes $15 to $20 million of maintenance capital. Our capital budget in 2025 is primarily related to WellConnects and the Rockies and MidCon segments, and integration capital related to our recently acquired Arcoma and DJ assets. Further, I would like to characterize that roughly $20 million of our capital budget in 2025 is a one-time or non-recurring expense. So as you can think about the business going forward, capital requirements will be closer to the $45 to $55 million range to support this level of EBITDA in 2026 and beyond. And with that, I'd like to hand the call over to Bill to provide some additional details on our financial results and 25 guidance.