Cash selling price of $75 million reduces SMLP’s total leverage by approximately 0.3x and increases its liquidity and financial flexibility for reinvestment
Develops Double E’s business relationship with Matador, a leader Delaware producer with nearly 125,000 net acres in New Mexico and an existing economic interest in a processing plant complex Eddy County, New Mexico currently connected to Double E
Matador assumes additional firm take-or-pay capacity on Double E
Provides Summit with additional financial flexibility to pursue strategic scale development opportunities for Double E and around Summit’s other core assets in the Growth Pools
Transaction expected to be accretive to SMLP unitholders
Summit reiterates its 2022 adjusted EBITDA guidance range of $205 million at $220 million
HOUSTON, June 9, 2022 /PRNewswire/ — Summit Midstream Partners, LP (NYSE: SMLP) (“Summit”, “SMLP” or the “Partnership”) today announced that its wholly-owned subsidiary, Summit Midstream Holdings, LLC (“SMP Holdings “), has entered into a definitive agreement to sell Summit Midstream Permian, LLC (“Summit Permian”), owner of the Lane Gathering and Processing System (“Lane G&P System”) in the Delaware Basin to a wholly owned subsidiary of Matador Resources Company (“Matador”) for a cash sale price of $75 million, subject to customary transaction adjustments. Matador will also assume Summit Midstream Marketing, LLC, a wholly owned subsidiary of SMP Holdings, firm take-or-pay capacity on the Double E pipeline associated with the Lane G&P system. The transaction is subject to customary closing conditions and is expected to close in the second quarter of 2022.
Heath DenekePresident, CEO and Chairman of the Board, said, “We are delighted to announce this strategic transaction with Matador, a leading upstream and midstream operator in the Delaware Basin. With the sale of the Lane G&P system, Summit is focusing on the Delaware will handle the full commercialization and expansion of its highly strategic Double E pipeline system. The assumption of additional take-it-or-pay firm capacity further expands Double E’s business relationship with Matador, a major holder of area with nearly 125,000 net acres in Tourbillon and Leah Southeast Counties New Mexico. Pro-forma for the transaction, Matador will have two gas processing complexes connected to the Double E system, including Matador’s interest in the San Mateo Midstream 460 MMcf/d Black River processing plant complex, LLC and the 60 MMcf/d Lane G&P system. The transaction is highly accretive to Summit, reducing our total leverage ratio by approximately 0.3x and creating additional liquidity and financial flexibility to reinvest in strategic scale development opportunities in our Rockies and Northeast segments and in the Double E joint venture. In addition, following the accounting for the transaction, Summit reiterates its full-year 2022 Adjusted EBITDA guidance range of $205 million at $220 million.”
Track G&P System Overview
The Lane G&P system includes approximately 45 miles of low and high pressure gathering pipeline in Tourbillon and Leah northern counties Delaware Basin, three compressor stations and a 60 MMcf/d cryogenic treatment plant commissioned in December 2018. Gathering and processing services on the Lane G&P system are provided under long-term, fee-based gathering agreements with producers that primarily target crude oil production from the Bone Spring and Wolfcamp shale formations. Residual natural gas is primarily delivered to the Double E pipeline.
Guggenheim Securities acted as financial advisor and Locke Lord LLP. served as Summit’s legal counsel. O’Melveny & Myers LLP served as legal counsel to Matador.
About Summit Midstream Partners, LP
SMLP is a value-driven limited partnership focused on developing, owning and operating midstream energy infrastructure assets strategically located in key producing areas of unconventional resource basins, primarily shale formations, on the American continent. SMLP provides gathering, processing, and transportation services for natural gas, crude oil, and produced water under primarily long-term, fee-based agreements with customers and counterparties in six unconventional resource basins: (i) the Appalachian Basin, which includes the Utica and the Marcellus Shale formations in Ohio and West Virginia; (ii) the Williston Basin, which includes the Bakken and Three Forks shale formations in North Dakota; (iii) the Denver-Julesburg Basin, which includes the Niobrara and the Codell shale formations in Colorado and Wyoming; (iv) the Permian Basin, which includes the Bone Spring and Wolfcamp formations in New Mexico; (v) the fort worth Basin, which includes the Barnett Shale formation in Texas; and (vi) the Piceance Basin, which includes the Mesaverde formation as well as the Mancos and Niobrara shale formations in Colorado. SMLP owns an equity investment in Double E Pipeline, LLC, which provides interstate natural gas transportation service from multiple receipt points in the Delaware Basin to various delivery points in and around the Waha Hub in Texas. SMLP also holds an equity-accounted interest in Ohio Gathering, which operates extensive natural gas gathering and condensate stabilization infrastructure in the Utica shales in Ohio. SMLP is headquartered in Houston, TX.
This press release contains certain statements regarding expectations for the future that are forward-looking within the meaning of the federal securities laws. Forward-looking statements include, but are not limited to, any statement that may project, indicate or imply future results, events, performance or achievements and may contain the words “expect”, “intend”, ” plan”, “anticipate”, “estimate”, “believe”, “will”, “will”, “will probably result” and similar expressions, or future conditional verbs such as “may”, “shall”, “should”, “would” and “could”. In addition, any statements regarding future financial performance (including future revenues, profits or growth rates), current business strategies and possible actions taken by us or our affiliates are also forward-looking statements. Forward-looking statements also contain known and unknown risks and uncertainties (many of which are difficult to predict and beyond management’s control) that may cause SMLP’s actual results in future periods to differ materially from anticipated or projected results. A complete list of specific material risks and uncertainties affecting SMLP is contained in its 2021 Annual Report on Form 10-K filed with the Securities and Exchange Commission (the “SEC”) on February 28, 2022, as amended and restated from from time to time. All forward-looking statements contained in this press release are made the date of this press release and SMLP assumes no obligation to update or revise any forward-looking statements to reflect new information or events.
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