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| Statement |
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| We are making progress with our shippers to secure additional take-or-pay contracts among who is at the fundamentals in the Delaware Basin are really setting the stage of what we expect to be a very productive year in commercializing Double E |
| As Heath mentioned, we had a great year and with the business trending as we expected, and are excited about how 2024 is shaping up |
| There continues to be approximately 100 rigs running at Eddy and Lea Counties and announced processing plant expansions in Delaware Basin, giving us confidence in the fundamental long-term outlook of the pipe |
| Look, as discussed on the call today, we are certainly pleased with the progress that we made in 2023 and really are excited about the outlook and opportunity set for Summit in 2024 and beyond |
| And with $260 million to $300 million of expected adjusted EBITDA and $30 million to $40 million of total capital, we expect significant free cash flow generation and debt paydown throughout the course of the year |
| Aside from our solid financial results, we have multiple operational and commercial successes that we expect will drive earnings growth in 2024 and beyond |
| And as Heath already mentioned, approximately 85% of those wells are from crude oil oriented and liquids rich gas oriented areas, which we view as favorable given the support of crude oil strip |
| 2023 was certainly a very busy and very productive year for Summit and our employees and we expect that those activities we executed in 2023 to continue to drive growth into 2024 |
| We will also discuss our current 2024 outlook, which is looking to be another solid year despite the low gas price environment that we are in |
| So we kind of view all this infrastructure build – playing the infrastructure build as well as some of the recent discussions with potential customers that the markets coming to us here as we expected and we are excited about the prospects |
| This level of activity will drive volume throughput growth in gas volumes and a modest volume decline in liquids throughput |
| As the new contract will connect Double E to a $300 million a day processing complex that is currently under construction and will position us to capture incremental volumes as that plant is expanding in the coming years |
| So I think, from our view, we see a lot of near-term opportunities here in and around our existing footprint that we can connect new plants in Delaware the residue gas to us |
| We completed a number of debottlenecking projects that will allow us more efficiently utilize the systems, which we believe will drive between $5 million and $10 million in optimization value starting in 2024 and beyond |
| Now, look, I think we’ve said what we can say at this point I think it’s been a very robust process |
| We remain very excited about the opportunity set to further maximize value for our unitholders and we look forward to providing more fulsome update in the near future |
| The Permian Basin segment, which includes our 70% interest in the Double E pipeline reported adjusted EBITDA of $8 million, an increase of approximately $2 million relative to the third quarter, due primarily to contractual ramp ups in take-or-pay volume to 985 million cubic feet per day |
| Natural gas volumes averaged 126 million cubic feet a day, an increase of 9 million cubic feet per day, relative to the third quarter, primarily due to wells connected during the second quarter reaching peak production and 37 new wells connected to the system during the quarter that should reach peak production in the second quarter of 2024 |
| Volume throughput on Double E averaged 386 million cubic feet per day, representing an increase of 18% relative to the third quarter |
| Of the expected well connects in ’24, approximately 15% are dry gas oriented wells, approximately 35% are liquids rich gas oriented wells and approximately 50% are crude oil oriented wells, which we feel is a good mix of commodity exposure, especially given the softness we are currently seeing in natural gas strip pricing |
| The Piceance segment reported adjusted EBITDA of $16.1 million, up $0.8 million relative to third quarter due primarily to 21 new well connects to the system during the quarter, driving volume throughput to 317 million cubic feet per day during the quarter |
| We are continuing to evaluate multiple opportunities ranging from asset sales to partnership level transactions, all with a goal of maximizing value for our unitholders |
| We started to see volumes increase on the Double E pipeline |
| The variance was largely due to higher volume throughput on our wholly-owned SMU system from three new wells turn-in-line during the quarter and a full quarter contribution of the 14 wells turn-in-line in the third quarter |
| So pretty right environment we think in 2024 for us to continue to gain additional contracts |
| In the Northeast, which is inclusive of our SMU system, proportionate share of Ohio Gathering joint venture and our Marcellus system, the segment averaged 1.62 Bcf per day during the quarter, inclusive of 826 million cubic feet a day of 8/8ths OGC volumes, and segment adjusted EBITDA totaled $28.4 million, an increase of $0.7 million from the third quarter of ‘23 |
| Now to the Barnett, we are expecting 15 to 25 wells in 2024, which we expect will result in approximately 15% volume throughput growth relative to 2023 |
| Now, onto our fourth and 2023 results, Summit delivered fourth quarter adjusted of $75 million and full year 2023 adjusted EBITDA of $257 million, which represents about 25% EBITDA growth from the prior year |
| This growth is driven by 170 to 230 well connects and we expect to connect to the systems in 2024 |
| But in addition to that, in and around the New Mexico area, we are seeing increase in not just activity levels around the Double E pipeline but the realization that the current residue gas takeaway situation is getting constrained |
| Statement |
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| Quickly on the Piceance, we are expecting no new well connects in 2024, which will result in a modest decline in volume and EBITDA compared to 2023 |
| The Rockies segment, which is inclusive of our DJ and Williston Basin systems generated adjusted EBITDA of $22.4 million, which was down by $1.1 million from the third quarter largely due to a 4.7% decline in liquids volume from natural production declines and lower commodity prices impacting our POP contracts in the DJ Basin |
| We estimate lower realized commodity prices negatively impacted gross margin by approximately $2 million during the quarter |
| The low end of our range reflects approximately 15% reduction in planned well connects, and we have further risked the timing of wells that are slated to come online in the second quarter and beyond |
| And as we have discussed previously, a customer continues to keep approximately $20 million a day of production shut-in due to the low natural gas prices and we estimate these shut-ins negatively impacted adjusted EBITDA by approximately $1.3 million during the quarter |
| Liquids volumes average 81,000 barrels per day, a decrease of 4,000 barrels a day relative to the third quarter, primarily due to natural production declines, partially offset by five new wells connected to the system during the quarter |
| We believe this slowdown in activity in the Williston is due primarily to third-party gas gathering constraints in the basin that should be alleviated towards the latter half of the year |
| We also aren’t terribly surprised to see some activity delays given some of the upstream M&A activity that occurred in mid to late 2023 up in the Williston |
| Summit reported fourth quarter net loss of $15.1 million, adjusted EBITDA of $75 million, resulting in full year 2023 adjusted EBITDA of $267 million |
| The low end risks, all of that even further, and the high end assumes customers hit their timing targets |
| The Barnett segment reported adjusted EBITDA of $5.8 million, a decrease of $0.3 million relative to third quarter, primarily due to an increase in operating expenses, partially offset by an increase in volume throughput from six new wells connected to the system during the quarter |
| This was partially offset by natural production declines behind our OGC joint venture |
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