Summit Midstream Partners LP Aktie

Thank you for standing by, and welcome to the Summit Midstream First Quarter 2026 Earnings Conference Call. [Operator Instructions] As a reminder, today's program is being recorded. And now I'd like to introduce your host for today's program, Randall Burton, Treasurer and Investor Relations. Please go ahead, sir.

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, Events and Presentations section or Quarterly Results section. With me today to discuss our first quarter 2026 financial and operating results is Heath Deneke, our President, Chief Executive Officer and Chairman; Bill Mault, our Chief Financial Officer; and Chris Tennant, our Chief Commercial 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, 2025, which was -- 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 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, Randall, and good morning, everyone. Summit reported first quarter 2026 adjusted EBITDA of $54.2 million, which was generally in line with expectations despite lower volumes and realized residue gas prices in the Arkoma. The underperformance in the Mid-Con segment was partially offset by gains in the Rockies segment, driven by higher-than-budgeted crude oil pricing.

So based on the current activity levels, the recent well performance and our visibility into the second half of the year volumes, we continue to expect results to trend towards the midpoint of our original 2026 adjusted EBITDA guidance of $225 million to $265 million.

Before I get into the operational highlights, I wanted to spend a moment on the macro picture, which we see becoming increasingly constructive for Summit. Crude oil prices are obviously much higher than the lows we saw earlier this year. And for a business like ours, where roughly 80% of our well connects in 2026 are expected in crude oil-oriented basins, a more constructive crude environment translates directly into improved producer economics and an incentive to accelerate and increase activity levels.

Several of our Rockies customers have communicated that they are actively working on plans to attempt to accelerate activity into 2026 and increase overall activity levels in '27.

We're also seeing benefits from higher crude oil pricing on our field condensate sales and our optimization activities in the Rockies segment. At the same time, the natural gas outlook remains favorable as well. Henry Hub has remained constructive. LNG export demand continues to grow rapidly and the long-term demand outlook from data center growth and electrification is increasingly supportive of the natural gas infrastructure we operate in our Mid-Con and Permian segments.

For our Mid-Con segment, that is a great backdrop to see activity levels pick up in the coming years in both the Arkoma and the Barnett as these assets are very well positioned on the natural gas pipeline grid to feed LNG and power markets along the Gulf Coast. The macro outlook is also very supportive of increasing demand for our Double E gas pipeline in the Permian that transports residue gas from multiple processing facilities throughout the core of the Delaware Basin to the Waha hub, which then connects to more than 20 Bcf a day of Eastern bound gas infrastructure that serves the East Texas and Louisiana Gulf Coast markets.

Turning to operations. We connected 37 wells during the quarter, including the first four Williston wells under the new 10-year crude gathering agreement that we announced last quarter in Divide County. Early production results from those wells have been encouraging. In Arkoma, while we did experience lower-than-expected well performance from 2 pads during the quarter, which was a primary driver of the volume underperformance in that segment. But both of these pads were drilled in the outer edges of our dedicated acreage footprint and in an attempt to further extend the boundaries of proven but undeveloped locations in the Caney and Woodford formations.

Recently, though, we have brought on a new 3-well pad in the dry gas area of our Arkoma system, and we're seeing these wells significantly outperform our internal expectations. These 3 wells continue to ramp up but have already averaged approximately 50 million a day combined over the past couple of days since being turned in line, which is a very encouraging early read, and it really gets us excited about future growth in the Mid-Con segment.

We currently have 5 rigs running behind the system with approximately 80 drilled but uncomplete wells, and we expect approximately 40 new well connects in the second quarter, including 20 in the Mid-Con segment. That second quarter activity and well results from some of the wells already connected in the second quarter sets up a very meaningful volume increase as we move into the back half of the year.

On the Double E front, subsequent to the quarter end, we executed another 10-year take-or-pay processing agreement for 100 million a day of firm capacity, which is slated to start in the first half of '27. That brings our total contracted volumes on Double E to just over 1.7 Bcf a day, and we continue to build momentum in our ongoing open season to secure additional commitments to support the previously announced 800 million a day midpoint compressor expansion project.

Given the market interest that we've seen thus far, we remain very optimistic about securing additional contracts that are necessary to help us make a final investment decision on the project this summer. We also made meaningful progress to further simplify and improve the balance sheet this quarter. We repaid all $45 million of accrued Series A Preferred Stock dividends, which clears a key milestone on the path to reinstate a common dividend. We completed a $42 million private placement of common stock to an affiliate of Tailwater Capital, our largest shareholder, which will help us fund high-return organic growth projects across our operating footprint.

And finally, we closed the Summit Permian Transmission term loan refinancing, which provides the financial flexibility to fund Double E capital growth while we continue to delever Summit's corporate balance sheet. So with that update, let me turn it over to Bill to walk through the details on the financials.

Thanks, Heath, and good morning, everyone. Summit reported first quarter 2026 adjusted EBITDA of $54.2 million, distributable cash flow of $26.9 million and free cash flow of $11.4 million. Total capital expenditures were $19.3 million for the quarter, inclusive of $3.7 million of maintenance capital, with the majority of the growth capital directed towards pad connections in the Rockies and Mid-Con segments.

With respect to Summit's balance sheet, we ended the quarter with $43.4 million of unrestricted cash and $116 million drawn on our revolving credit facility with approximately $381 million of available borrowing capacity after accounting for $2.7 million of undrawn letters of credit. Now moving on to the segments.

The Rockies segment generated adjusted EBITDA of $26.4 million, a decrease of $1.5 million relative to the fourth quarter of 2025, primarily due to a $1.2 million noncash imbalance a 3% reduction in liquids volumes, lower realized residue gas prices on our percentage of proceeds contracts and lower freshwater sales. This was partially offset by a 4.4% increase in natural gas volume throughput and improving crude oil and NGL prices that really started in March of '26.

We connected 18 wells in the DJ Basin and 13 in the Williston, including the first four 3-mile lateral wells under the new crude gathering agreement that we announced last quarter. Five rigs are currently running with approximately 60 DUCs behind the systems and several customers are working to try to accelerate their programs given the improved crude oil price environment.

The Permian segment reported adjusted EBITDA of $8.7 million, flat relative to the fourth quarter of 2025 and Double E volumes averaged 805 million cubic feet per day during the quarter. The Piceance segment reported adjusted EBITDA of $9.6 million, down $0.4 million from the fourth quarter, primarily driven by volume throughput declines of approximately 7.3%, which included 8 million cubic feet per day of temporary shut-ins as well as natural production declines with no new wells connected during the quarter.

Customers currently have approximately 20 million cubic feet per day of volume shut-in as a result of low regional gas prices, primarily in the White River Hub. And based on current forward prices in the region, we would expect that production to resume beginning in the third quarter of 2026. Finally, the Mid-Con segment reported adjusted EBITDA of $19.3 million, a decrease of $2.1 million from the fourth quarter, primarily driven by natural production declines, partially offset by 6 new Arkoma well connections during the quarter. Three additional Arkoma wells were connected subsequent to quarter end, and we have 17 Barnett DUCs expected to come online in the second quarter.

We expect second quarter activity and recently connected wells to drive an increase in Mid-Con volumes as we move throughout the remainder of the year. And with that, I'll turn the call back over to Heath for closing remarks.

Thanks, Bill. So to summarize, we're still tracking towards the $245 million midpoint of our adjusted EBITDA guidance for '26, and we continue to see a lot of momentum building across the portfolio in response to the improving commodity price outlook. We remain excited about the growth outlook for the business and believe the current macro outlook supports more than $100 million of organic EBITDA growth from our existing portfolio by 2030.

We continue to be active on the M&A front, evaluating opportunities that could further scale up the business in a value and credit accretive manner. We've also taken meaningful steps to further simplify and improve the balance sheet by cleaning up the accrued preferred dividends, completing the Tailwater common stock placement and closing the Permian transmission refinancing to support Double E growth. And finally, as we execute the business plan, we continue to have a line of sight on achieving our long-term 3.5x leverage target and being in a position to reinstate a common dividend in the near future.

We believe there's a pretty simple and achievable path forward to drive a lot of shareholder value in the coming years, and we're excited to get out on the road in the coming weeks as a management team to continue to tell the Summit story and continue to build momentum with investors.

So with that, I'd like to thank everyone again for joining the call today and supporting the business. And operator, I think we can open up the call for questions now.

[Operator Instructions] Our first question comes from the line of Mark Reichman from NOBLE Capital Markets.

Would you please discuss the competitive positioning of the Double E pipeline? Are you seeing increasing demand for incremental takeaway capacity tied to LNG's export growth? And -- and could Double E ultimately require additional expansion phases beyond what's currently contemplated?

Yes, you bet, Mark. This is Heath. Look, as far as the competitive position, I think Double E is in a pretty good shape on that front, honestly. We -- if you look at what's occurred with the build-out of the Delaware in terms of rig activity and where we've really seen volumes growth, they kind of started in Texas and have kind of migrated their way up to New Mexico.

And a lot of the -- in fact, I'd say the vast majority, if not all, of the other pipelines that we compete with have really kind of filled up their existing takeaway capacity.

In many cases, they've kind of gotten past the cheap easy-to-expand compression type projects and now for them to materially expand capacity, they're looking at laying brand-new greenfield or big loops, if you will, for their system to get existing capacity. So I think we're well positioned, having the -- recently just filled up our Latentf, our free flow capacity. I think this expansion that we're in the midst of on an open season, adding another, call it, 800 million to 900 million a day of capacity.

I think we're really one of the only options in town, frankly, that we think can be available by the end of 2028 to meet a lot of this incremental residue gas growth that we see in the Permian Basin. So we feel strongly about that. But I will say, just looking at our rates relative to other tariffs and the like, we're certainly at market rates with what we sell our capacity for on Double E. I think what really kind of gives us the advantage is the low-cost expandability that we still have remaining on the pipe and the ability to bring that to market in fairly short order.

Yes. Well, I was going to -- the second part of your question, I think you were asking about LNG growth. And look, there's no doubt.

If you look at the amount of infrastructure that has been built out and is in the process of being built out to move gas from Waha over to East Texas to kind of feed the LNG facilities in Texas and frankly, across into Louisiana as well, it's definitely been the primary catalyst of new infrastructure development.

I think there's upwards of over 20 Bcf a day of capacity that can -- that originates, frankly, from that Waha area that has access to those growing markets. So clearly, has been kind of the near-term catalyst. I will say what's been interesting to watch, particularly develop on Double E is that, that market is kind of getting maybe a little bit saturated in that there's been a lot of projects going in that direction. There's going to be a lot of LNG growth.

But I think we're starting to see additional markets attract interest from our shippers. So as an example, Energy Transfer's Desert Southwest project is all about getting gas west into Phoenix to serve some incremental power generation demand growth. We've also seen additional markets pointing towards the Mid-Con or up into the Midwest on the north end of our system really start to attract interest from shippers to kind of diversify the access that they have to market.

So thematically, I think what we're seeing is this massive, call it, 6, 7 Bcf a day of incremental supply growth over the next 3 to 5 years. And we're finding a lot of new projects, if you will, that are getting that gas distributed to the right points in the market. So absolutely what's fueling the current compression project open season -- and to your other point about do we think we're done after that? And I think the short answer to that is no.

I think there -- as those markets develop kind of on the northern end of our system, we'll have a lot of backhaul capacity, if you will, to move gas potentially from Waha or other processing plants located south of that, that really wouldn't require much additional build-out. It would just be effectively maybe making that compressor station that we're trying to get FID bidirectional to be able to push gas north or south depending on in the aggregate, which direction flows want to occur. And there's also some markets developing around our pipe.

We're in discussions with multiple data center/power gen customers that are looking to take advantage of the low gas price in the Permian Basin that are in close proximity to our pipe.

So that's an area that I'd say the majority of our customers to date are more supply push, getting supply out to the marketplace, predominantly producers or gathering and processing companies that control residue. But we could start to see some actually demand side guys come in and pay to have us expand our system to reach multiple processing plants to be able to get to buy gas directly from hubs.

So we really like how this asset is positioned. I think what we've kind of articulated to the market, we see our EBITDA growing from roughly $35 million up to the mid-60s here just with what we have contracted to date. And then if you look at with the expansion that we've announced, we think that can grow up to $90 million. And I think beyond that, I think there's ample room to see that EBITDA continue to grow over the next several years.

That's very helpful. Now how sustainable is Rockies throughput growth over the next several quarters? And what level of producer activity are you seeing in the DJ and Williston Basins? And on that, you might discuss the commodity mix and margin profile of the Rockies.

Yes. I'll let Bill kind of handle the details. Definitely a lot of momentum in both segments, as you can imagine, with the improving crude strip. We've seen producers, in some case, look to pick up additional rigs, and we've seen additional wells even kind of finding their way into the back half of 2026. So I think we've got a lot of momentum. And Bill, why don't you kind of fill in on some of the details here?

Yes. And so a couple of things going on, and I'll start in the DJ, Mark. So there's a large integrated kind of public shipper in the DJ that's a customer of ours. We've actually got 16 wells expected to come online from them here in the second quarter.

That is really just the start of a broader program, call it, over the next 2 to 3 years that they intend to execute on. That's one that we've been around and have probably talked to you about in the past that we're starting to see actually come to fruition here starting here in Q2. So excited about that one. There's also a large private in the DJ. They've been drilling behind our Hereford Ranch processing plant. We've seen outlooks from them that could fill up that processing plant. We'll see how active they get, but they are picking up a second rig in the basin, which, again, I think is just dovetailing off kind of this supportive commodity price environment and trying to take advantage of that. The only other one I'd add in the DJ Peoria Resources acquired Verdad a few months ago. I think we mentioned this during our Q4 earnings, but that did create a little bit of a stall in activity for them in '26.

But we're excited just given the environment we're in and what they're doing that I'd expect them to kind of pick back up activity here late '26 into '27, which we're really not getting the benefit of here in '26. Up in North Dakota, Mark, we've had several customers. They're trying to figure out how to accelerate development. Obviously, that takes coordination of completion crews and being able to actually execute on it.

But there is a push from several customers out there to try to accelerate timing. One thing that -- and really in the third quarter, we've had a customer that has been somewhat inactive behind our acreage up in North Dakota in the past couple of years. They're actually bringing on kind of a pad focused in the crude oil and produced water gathering area, the services we provide them.

The first set of wells is coming on in the third quarter. We've had conversations with them about additional activity in '27. And Mark, as you know, with the crude and water cuts up there, those pads are meaningful for volumetric growth behind the system. So excited to kind of see that upcoming. And as it relates to kind of margin profile, you should think about the Rockies segment is roughly 35% kind of commodity price exposed.

That's primarily our POP contracts in the DJ as well as we retain all the condensate drip that falls off of our system and our compressor stations. And when you break that down a little further, Mark, I would think about it as between NGLs and crude, that represents roughly 75% and then residue represents the remaining 25% of that kind of product margin breakdown.

One thing Bill just add to what Bill was talking about with the Rockies segment. I mean, clearly, it in the Permian are going to be the 2 largest drivers of growth for us in the out years. And as we've kind of talked about and provided in some of our investor materials, we see roughly upwards of $100 million of EBITDA growth organically from '25 into the 2030 time frame. And so if you think about that, what does that mean for the Rockies, the things that Bill has kind of articulated that we're seeing early signs and maybe even accelerating from what we thought when we actually published that, you can see the Rockies growing from roughly around $85 million of contribution today to upwards of $160 million over that -- through 2030.

So substantial amount of growth there. And like I said, we're probably seeing signs that potentially that growth may even get further accelerated from what we thought the ramp-up would be between now and 2030.

Yes. Jumping on the end of that, Heath, this is Chris Tennant, Mark. We're having conversations with all of our major customers in that area, really thinking about the next cycle of growth and infrastructure needed to really plan accordingly. So it gives us a lot of confidence when we look forward in those areas.

Are there any bolt-on acquisition opportunities in your operating regions, particularly the Rockies and Permian where you're seeing the stronger operational momentum?

Yes. Certainly, I'd say the Rockies is probably where we see the most near-term opportunities. There's still a fair amount of privately owned, privately backed systems that need to find a liquidity or an exit point here fairly soon. So we're pretty active identifying and working, having conversations around some of those assets. And you should think of those kind of fitting that historical profile that we've executed over the past 3 years. I mean these are going to be roughly kind of in that, call it, 6 -- somewhere between 5x to 7x type purchase multiples on an LTM basis that are synergistic that we think we can kind of drive down to very accretive levels or that we would be able to capture a lot of accretion from a value perspective and from a leverage perspective in the out years.

I think the Permian is a little different. I do think there are some larger opportunities that we're kind of looking at. I think that's one of the differentiators between there's probably more actionable items that we see in the Rockies that are kind of fit more of that, call it, $30 million to upwards of $100 million of EBITDA. When you start getting into the Permian, the type opportunities that we are seeing are probably north of that, maybe closer to the $150 million to $200 million.

They're not completely out of reach, but obviously, they're ones that take -- are going to be more complex to execute on and something that I wouldn't rule out in the out years. But I think near term, I think we're more focused on the Rockies opportunities at this point.

And then my last question is just what are the remaining plans and objectives in your broader capital structure optimization strategy? And how do you prioritize the capital allocation between debt reduction, organic growth, acquisitions and return of capital to shareholders?

Yes, Mark. So I'd say.. Over the next couple of years, Mark, one thing that we've talked about, particularly when we did the refinancing of the Double E refinancing here last quarter, we set that up whereby in, call it, that 2028 time frame, we've got the flexibility to kind of clean that up, bringing up on balance sheet in the recourse borrower group. That's probably the next kind of item on the list.

I don't think -- as we sit here today, Mark, we've been prioritizing post growth capital, the remaining free cash flow, prioritizing debt repayment to get to our kind of long-term leverage target of 3.5x. So I think you'll see us prioritize that, Mark, until we get to that long-term leverage target. And it's a balancing act. As it relates to M&A and organic growth, we -- I'd tell you, a lot of our organic growth projects are commanding very, call it, 20, 30-plus percent unlevered rates of return, which are obviously very attractive, and we make the long-term decision to focus on reinvesting in growth to the extent additional opportunities arise on the organic side.

[Operator Instructions] And this does conclude the question-and-answer session as well as today's program. Thank you, ladies and gentlemen, for your participation.You may disconnect. Good day.

Hello, and welcome to the Summit Midstream Corporation Annual Meeting of Shareholders. Please note that this meeting is being recorded. [Operator Instructions] The meeting is about to begin.

Welcome to Summit Midstream Corporation's 2026 Annual Meeting of Stockholders. This is James Johnston, Executive Vice President, General Counsel, Chief Compliance Officer and Secretary of the Corporation. First, I would like to introduce our Board of Directors. The proxy statement includes additional information about each director.

Jim Cleary was appointed in 2020 and serves as our Lead Independent Director. Heath Deneke is President and Chief Executive Officer of the Corporation and has served as Chairman of the Board since 2019. Jason Downie was appointed in 2024. Edward Herring was appointed in 2024. Lee Jacobi was appointed in 2019. Stephen Lipscomb was appointed in 2024. Rob McNally was appointed in 2020. Rommel Oates was appointed in 2022. Jerry Peters was appointed in 2012. Carolyn Stone was appointed in 2026 and Drew Winston was appointed in 2024.

We also have present today, members of the management team, including Randall Burton, our Vice President of Finance and Investor Relations; and John Griffin, our Deputy General Counsel. We're also joined by Kirkland & Ellis, our outside legal counsel; and representatives of Deloitte & Touche, our independent registered public accounting firm.

Mr. Chris Hall with Equiniti, our transfer agent, has been designated as the Inspector of Election. I have set the agenda for the meeting, which you should have on the documents tab on your screen. The meeting is now formally called to order.

We have a list of stockholders entitled to vote at the meeting and the valid proxies received from those stockholders as provided to us by Equiniti. The stockholder with a control number for this meeting wishing to ask a question regarding any of the items of business may submit the question using the messaging tab on the screen. Please provide your name and state whether you are a stockholder or the proxy of a stockholder. If you are a proxy for a stockholder, please provide the name of the stockholder you represent. If your question is specifically for Deloitte, please indicate that.

This brings us now to the first item on the agenda, which is the determination of quorum. Our bylaws provide for the presence in person or by proxy of holders representing a majority of the voting power of the outstanding shares of the capital stock of the corporation entitled to vote at this meeting shall constitute a quorum for the meeting.

Further, the presence in person or by proxy of holders representing a majority of the voting power of the outstanding shares of Class B common stock of the corporation entitled to vote at this meeting shall constitute a quorum for purposes of any separate vote of the holders of the Class B common stock as a class.

Chris, please provide the inspector's report whether there is a quorum present.

There are present at the meeting in person or by proxy, more than 10,171,920 shares of voting stock consisting of both common stock and Class B common stock and more than 3,262,234 shares of Class B common stock. This constitutes a quorum with respect to all items of business to be considered at the meeting.

Thank you, Chris. The notice of the 2026 Annual Meeting of Stockholders was sent on or about April 10, 2026 to stockholders of the corporation who are holders of record on the record date for the meeting, which was March 31, 2026. A quorum is present in person and by proxy. Therefore, the meeting is lawfully and properly convened.

We will now proceed with the items presented in the proxy statement furnished to our stockholders. If you have already submitted a valid proxy and do not wish to revoke it, you do not have to vote now during the meeting. Your votes will be cast as indicated on your proxy card. If you wish to change your vote or have not yet voted, please vote now using the voting tab on your screen. You are able to vote at any time during the meeting until we close the polls.

The meeting will now consider the 5 business items on the agenda as set out in the proxy statement, which are:

First, election of 3 Class II director nominees named in the proxy statement as directors to serve for a 3-year term; second, the election by the holders of Class B common stock of 1 Class II director nominee, the Class II Class B Director named in the proxy statement as director to serve for a 3-year term; third, the ratification of the appointment of Deloitte & Touche as the Corporation's independent registered public accounting firm for 2026; fourth, the approval of the advisory resolution on executive compensation; and fifth, the approval of amendment #1 to the Summit Midstream Corporation 2024 long-term incentive plan.

I'll present each of the 5 business matters and then a vote will be taken on each item. The first item of business on our agenda is the election of 3 nominees as directors. The Board of Directors has nominated Heath Deneke, Rob McNally and Carolyn Stone as Directors of the corporation. In accordance with our Certificate of Incorporation, Mr. Deneke, Mr. McNally and Ms. Stone will be elected as Class II directors to serve 3-year terms expiring on the date of the Annual Meeting of Stockholders to be held in 2029. The proxy statement contains additional information about these nominees. In accordance with our bylaws, directors are elected by a plurality of the votes cast by our stockholders. For this annual meeting, in accordance with our bylaws, stockholder nominations may be brought before the meeting only if the secretary receives the nominations in writing no later than March 9, 2026. We did not receive any stockholder nominations. The Board of Directors has recommended to the stockholders that they elect Mr. Deneke, Mr. McNally and Ms. Stone.

The second item on our agenda is the election of 1 Class II Director, the Class II Class B Director. The holders of Class B common stock have nominated Edward Herring as a Director of the Corporation. In accordance with our Certificate of Incorporation, Mr. Herring will be elected as a Class II Director to serve a 3-year term expiring on the date of the Annual Meeting of Stockholders to be held in 2029. The proxy statement contains additional information about Mr. Herring. In accordance with our Certificate of Incorporation, Class II Class B directors are elected by a plurality of the votes cast by the holders of Class B common stock. The Board of Directors has recommended that the holders of Class B common stock elect Mr. Herring.

The third item on our agenda is the ratification of the Board's appointment of Deloitte as the independent registered public accounting firm for the Corporation for the year 2026. Deloitte has been our independent registered public accounting firm since 2009. In accordance with our bylaws, ratification of the appointment of the independent registered public accounting firm will require the affirmative vote of a majority of the votes cast at this meeting. The Board of Directors has recommended that the stockholders vote to ratify the appointment of Deloitte for 2026.

The fourth item on our agenda is the nonbinding advisory resolution on compensation of the Corporation's named executive officers, otherwise known as the say-on-pay vote. Although not binding, the votes will be considered by the Compensation Committee of the Board when making future compensation decisions for our named executive officers. The proxy statement contains considerable information about the Corporation's compensation practices. The Board has recommended that the stockholders vote on an advisory basis to approve this proposal.

The fifth and final item on the agenda is the approval of Amendment 1 to the Summit Midstream Corporation 2024 Long-Term Incentive Plan, or LTIP. In accordance with our bylaws, approval of amendment 1 to the LTIP will require the affirmative vote of a majority of the votes cast at this meeting. The proxy statement contains additional information about Amendment 1 and the LTIP. The Board of Directors has recommended to the stockholders that they vote for Amendment 1. We'll pause to check if any questions. You can always contact Summit Investor Relations at [email protected] if you have any questions outside of this meeting. Randall, are there any questions?

There are no questions.

Thank you, Randall. I will now call for the vote on these 5 items of business. Please cast your votes if you have not already done so, I will be closing the polls shortly.

[Voting]

I will now declare the polls closed. Chris, please tabulate the votes on these proposals and provide the results whenever you're ready.

Mr. Deneke, Mr. McNally and Ms. Stone were all elected to the Board of Directors by a plurality of the votes cast by our stockholders. Mr. Herring was elected to the Board of Directors by a plurality of votes cast by the holders of Class B common stock. The appointment of Deloitte as the independent registered public accounting firm was ratified by the affirmative vote of a majority of the votes cast at this annual meeting. 84% of the votes cast were in favor of the say-on-pay advisory proposal and the majority of votes cast are in favor of Amendment #1 to the Summit Midstream Corporation 2024 Long-Term Incentive Plan.

Thank you, Chris. I declare that Ms. Stone, Mr. Deneke, Mr. McNally, and Mr. Herring have been elected to the Board of Directors, that Deloitte's appointment for 2026 has been ratified and that the advisory resolution on executive compensation and Amendment 1 to the LTIP were both approved by a majority of the votes cast. The results are to be incorporated into the minutes of this meeting.

This completes our business agenda for today. There is no further business to come before the meeting today. So the meeting is concluded. Thank you for your investment in Summit Midstream and for attending the meeting.

You may now disconnect.

Good day, and thank you for standing by. Welcome to the Summit Midstream Corporation Fourth Quarter 2025 Earnings Conference Call. [Operator Instructions] 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 of Finance and Treasurer. Please go ahead.

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

With me today to discuss our fourth quarter and full year 2025 financial and operating results is Heath Deneke, our President, Chief Executive Officer and Chairman; Bill Mault, our Chief Financial Officer; and Chris Tennant, our Chief Commercial 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, 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 differ materially from expected results.

Please also note that on this call, we use the terms EBITDA, segment adjusted 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.

Great. All right. Well, thanks, Randall, and good morning, everyone. I wanted to start this morning by introducing you to a new voice you'll hear on the call today. Chris Tennant, who joined Summit in February as our Chief Commercial Officer, is joining us. Chris brings more than 3 decades of experience across the oil, natural gas and NGL value chain, and he'll be leading our commercial organization going forward. Chris has hit the ground running since joining the team, and is already making a strong impact across the organization. I'm excited to have him here, and look forward to the contributions he'll make as we continue executing on Summit's growth strategy.

Turning now to Slide 3. We're very pleased with the progress Summit made during the quarter and in the first couple of months of 2026. From a financial perspective, Summit generated approximately $58.6 million of adjusted EBITDA in the fourth quarter, along with $33.7 million of distributable cash flow and $17 million of free cash flow.

Operationally, and despite the weakening of oil prices in the second half of 2025, we continue to see solid development activity across our systems, with 7 rigs currently running behind our footprint and approximately 90 drilled but uncompleted wells. At this point, we have visibility to between 116 and 126 well connections in 2026, which is relatively modest compared to prior years. However, we could see more activity accelerate in the second half of the year as producers look to take advantage of the recent run-up in oil prices.

On the commercial front, we made a tremendous amount of progress since our last update. Starting with the Double E Pipeline, we recently signed 2 11-plus year transportation agreements totaling $440 million per day of firm capacity. In addition, we received an affirmative FID notice on the previously announced producers Midstream 2, $100 million a day agreement that we announced last year. In the aggregate, this represents more than 0.5 Bcf a day of new long-term take-or-pay agreements that we've executed over the past 6 months.

With these new agreements and the corresponding step-up in committed take-or-pay volumes over the next several years, our Permian segment adjusted EBITDA is expected to grow from $34 million in 2025 to roughly $60 million by 2029. With these new contracts, Double E's existing mainline capacity is now generally fully subscribed. However, as Chris will get into further on the call, we have launched a binding open season to solicit additional customer commitments to support a mainline compression project that would expand the pipeline's capacity by approximately 50% or roughly 800 million a day.

Additionally, we successfully refinanced Double E cap structure with a new $440 million term loan facility, which enables an $85 million distribution back to Summit which we intend to use to repay $45 million of accrued and unpaid dividends and reduced borrowings under the ABL. Bill will walk through the details of the transaction later in the call, but this transaction is a major win for the company as it increases our financial flexibility while allowing us to continue to execute on these high-return growth projects at Double E, including the Mainline Compression Project without straining Summit's corporate balance sheet.

In addition, the repayment of the accrued and unpaid dividends on the Series A preferred stock further simplifies Summit's balance sheet, and is also an important step towards enabling a sustainable return of capital program for our shareholders in the future.

We're also very excited about the growth outlook in the Rockies segment as we continue to see development activity up in the [ Bakken ] shift towards our pipeline footprint in Williams and Divide counties. As Chris will cover later in the call, our Polar & Divide system is uniquely positioned to benefit from that shift as evidenced by a new long-term crude gathering agreement that we executed in the fourth quarter in Dubai County. There's also a lot of positive momentum building up around our G&P system in the DJ Basin that we're excited about as well. I'm sure we'll be updating everyone on as we move throughout the rest of 2026.

And finally, at the end of the call, I wanted to walk investors through a snapshot of Summit's strong and highly visible organic growth outlook that will be led by our Permian and Rockies segment. We're very excited about the commercial momentum we have around the business and the growing backlog of very attractive, high returning organic growth projects that we believe positions the company to achieve over $100 million of adjusted EBITDA growth by 2030. We believe we'll generate a tremendous amount of shareholder value in the coming years as we execute on these growth plans, while we maintain our financial discipline and continued focus on improving the balance sheet.

And with that, I'll turn the call over to Bill to walk through our financial results and guidance on Slide 4.

Thanks, Heath, and good morning, everyone. And before jumping to Slide 4, why don't we stay on Page 3. Summit reported fourth quarter adjusted EBITDA of $58.6 million, resulting in full year 2025 adjusted EBITDA of approximately $243 million. Capital expenditures totaled $19 million for the quarter and $89 million for the full year.

With respect to Summit's balance sheet, we ended the year with net debt of approximately $930 million and approximately $890 million pro forma for the $40 million repayment of the ABL associated with the $85 million onetime distribution from the new Summit Permian transmission term loan. This brings pro forma leverage to approximately 3.9x. Our available borrowing capacity at the end of the fourth quarter totaled approximately $387 million, which included roughly $1 million of undrawn [ letters ] of credit.

Now on to the segments. The Rockies segment, which includes our DJ and Williston Basin systems, generated adjusted EBITDA of $27.8 million, a decrease of $1.2 million relative to third quarter, primarily driven by a decline in liquids volume due to natural production declines, partially offset by modest growth in natural gas volumes.

Liquids volumes averaged approximately 66,000 barrels per day during the quarter, a decrease of roughly 6,000 barrels a day relative to the third quarter, primarily due to natural production declines and no new well connections. Natural gas volumes averaged approximately 160 million cubic feet per day, an increase of roughly 2 million cubic feet per day relative to third quarter as well as connected early in the year continued to ramp towards peak production.

During the quarter, we connected 33 new wells in the DJ Basin, which we expect to reach peak production in the second quarter of 2026. We currently have 6 rigs running on the system, including 4 in the Williston and 2 in the DJ, and approximately 65 DUCs, which provides good visibility into expected development activity in 2026.

The Permian Basin segment, which includes our 70% interest in the Double E pipeline, reported adjusted EBITDA of $8.7 million, an increase of $0.1 million relative to the third quarter, primarily due to higher volume throughput on the pipeline. Following throughput on Double E averaged 861 million cubic feet per day during the quarter.

The Piceance segment reported adjusted EBITDA of $10 million, a decrease of $2.5 million relative to third quarter, primarily due to a modest decline in volume throughput and certain deferred revenues recognized in the prior quarter.

Finally, the Mid-Con segment reported adjusted EBITDA of $21.5 million, a decrease of approximately $2.1 million, primarily due to lower volume throughput from natural production declines across the Arkoma and Barnett systems. During the quarter, we connected 6 wells in the Arkoma and no new wells in the Barnett. Subsequent to quarter end, we connected an additional 6 wells in the Arkoma, and there is currently one rig running behind the Arkoma system in approximately 20 DUCs.

Let me now turn to Page 4 and discuss our outlook for 2026. We are establishing 2026 adjusted EBITDA guidance of $225 million to $265 million and total capital expenditures of approximately $85 million to $105 million, which includes $35 million to $50 million in base business growth capital, approximately $15 million to $20 million of maintenance capital and approximately $35 million of contributions to the Double E joint venture. The $35 million of contributions to the Double E JV are expected to be fully funded through the new term loan facility we closed yesterday. The majority of the base business growth capital will be directed toward pad connections in the Rockies and Mid-Con regions, where we continue to see steady development activity behind our systems.

Similar to previous years, our guidance range incorporates real-time feedback we are receiving from our customers regarding their development plans, and we actively track rigs and completion crews across our systems to ensure well connects remain on schedule.

Just as a reminder for our risking methodology. If our producers hit their current turn-in-line dates and production targets, we would expect to be near the high end of our adjusted EBITDA guidance range. The midpoint of the range reflects modest risking applied to current drilling schedules, while the low end assumes additional delays in well connects expected later in the year, which could push some of that activity into 2027.

Across our footprint today, we currently have 7 rigs running and approximately 90 DUCs behind our system, which provides line of sight to the 116 to 126 well connections expected in 2026. Approximately 80% of those expected well connections are crude oil-oriented wells, with the remaining 20% natural gas-oriented. Commodity price assumptions for this range assumes average crude oil prices in the mid-60s and natural gas price of approximately $3.40 per MMBtu. There's obviously been a lot of upside movement in crude oil prices over the past few weeks, which if sustained throughout the year, could lead to acceleration of activity from our customers and improvement in product margin associated with certain percentage of proceeds contracts in the DJ Basin.

In the Rockies, we are currently expecting 90 to 100 well connects in 2026, with a fairly even split between the DJ and the Williston. This level of activity, along with the 33 wells connected in the fourth quarter, will drive volume throughput growth in natural gas and liquids. Additionally, of the roughly 45 to 50 wells expected in the Williston, we will be gathering both crude and produced water for 9 of those wells, which we expect around a 3:1 produced water to crude oil ratio.

Expected well connections in the DJ are a little bit lower in 2026 than historical average. This is primarily due to the recently announced acquisition of Verdad Resources, a key customer behind the system by Peoria Resources, a subsidiary of [ JPAX ] Corp. Long term, we're excited about the acquisition and expect it to be a net positive to development. But as with all upstream consolidation, it has created some near-term delays in development.

In the Mid-Con, we are expecting 26 wells to be connected to the system, including 9 in Arkoma and 17 in the Barnett. In the Arkoma, all but 3 of those wells are already connected and flowing. And in the Barnett, all 17 wells are currently in documentory. Our key customer in the Arkoma is evaluating additional development at late 2026 and early 2027, but we have not included that potential activity in our financial guidance until we get confirmation that they intend to drill and complete those wells. With the level of activity included in our financial guidance, we would expect volumes in the Mid-Con to be relatively flat year-over-year.

In the Piceance, we are expecting no new well connects in 2026, which will result in a continued decline in volume and EBITDA relative to 2025. Additionally, shortfall payments are expected to decline by approximately $4 million, from $17 million in 2025 to approximately $13 million in 2026. As a reminder, [ MVCs ] and shortfall payments completely roll off in the third quarter of 2026. So 2027 will not have MVC shortfall payments in the Piceance.

Shifting to the Permian. Year-over-year EBITDA growth is primarily driven by contractual step-ups in long-term take-or-pay transportation agreements that fully ramped in November of 2025. Additionally, we expect 2 of the recently signed firm transportation agreements on Double E to begin service in the fourth quarter of 2026, which will provide some incremental EBITDA.

I'll now turn the call over to Chris to discuss the commercial momentum we're seeing on Double E and expected growth in EBITDA associated with recently executed commercial contracts on Slide 5.

Thanks, Bill, and good morning, everyone. Over the past several months, we've made significant progress commercializing the remaining free flow capacity on the pipeline. With the recently executed transportation agreements, including the previously announced producers midstream contract, Double E has secured over 500 million cubic feet per day of new long-term take-or-pay commitments over the past 6 months.

Upon full ramp of those agreements, Double E will have approximately 1.6 Bcf per day of firm take-or-pay contracts with a group of prominent primarily investment grade shippers. These agreements also expand Double E's downstream connectivity with new and highly valued delivery points into the [ Transwestern ] central pool, the [indiscernible] [ Brinson ] pipeline and a planned future connection with [ Desert Southwest ] pipeline. These connections significantly increased the end market optionality available to our shippers and improves access to several important demand centers.

Given the strong commercial momentum we've seen, the remaining free flow capacity on the pipeline is now effectively full, which has accelerated our efforts to pursue a mainline compression expansion. As Heath mentioned earlier, we recently launched a binding open season to solicit additional shipper commitments to support that project, which could expand Double E's capacity by approximately 50%, from 1.6 Bcf per day to roughly 2.4 Bcf per day.

Based on our currently contracted volumes, we expect the Permian segment adjusted EBITDA to reach approximately $60 million by 2029. Importantly, if we're successful in fully commercializing the planned expansion capacity, that EBITDA contribution could increase to approximately $90 million or more by 2030.

Stepping back for a moment, we continue to see strong underlying fundamentals across the Delaware Basin. Producers are continuing to improve drilling efficiencies and extend lateral lengths, while processing capacity across West Texas and New Mexico continues to expand. As a result, demand for reliable residue gas takeaway remains strong, and we believe Double E is very well positioned as a critical transportation corridor connecting the Delaware Basin to multiple downstream markets.

With that commercial update, I'll turn it back to Bill to walk through the recent Double E refinancing on Slide 6.

Thanks, Chris. Yesterday, Summit Permian Transmission entered into a new $440 million senior secured term loan facility maturing in March 2031, including $340 million funded at closing, a $50 million committed delayed draw facility to support expansion projects and a $50 million accordion feature for future growth opportunities. Proceeds from this facility were used to repay the existing Permian transmission credit facility and the subsidiary preferred equity at Summit Permian Transmission Holdco, simplifying the capital structure and extending the maturity profile of the asset.

The transaction also enabled an $85 million distribution back to Summit. And as Heath mentioned earlier, Summit intends to use those proceeds to repay approximately $45 million of accrued preferred dividends and reduced borrowings on the ABL by approximately $40 million. Beyond improving our leverage profile and strengthening the balance sheet, the new facility also provides the capital needed to fund the expected growth projects on Double E, including the recently announced plant connections and the potential mainline compression expansion project Chris mentioned.

Overall, this transaction simplifies the capital structure, funds, high-growth projects and position Summit with greater financial flexibility moving forward. With the planned repayment of the Series A preferred stock accrued and unpaid dividends, Summit will have satisfied all conditions to allow it for a return of capital program to its common shareholders.

And with that, I'll turn the call back to Chris to discuss our recent commercial success in the Williston Basin on Slide 7.

Thanks, Bill. In the fourth quarter, we executed a new 10-year crude oil gathering agreement with a producer in Divide County, North Dakota. The agreement includes a large area of dedication, spanning more than 200,000 acres along our existing Polar and Divide systems, and represents a meaningful expansion of dedicated acreage supporting our infrastructure in the region. This new customer is currently running one rig and executing on their development program. The first pad associated with this agreement, consisting of 4 3-mile laterals, is expected to be turned in line in early 2026.

More broadly, we continue to be encouraged by the innovation we're seeing from Williston Basin operators, particularly as they extend lateral lengths and improved drilling and completion efficiencies. These improvements are helping drive development activity in areas such as Northern Williams County and Southern Divide County where Summit systems are well positioned. This agreement expands both our dedicated acreage position and long-term development inventory, and we believe it positions us well to capture additional development across our footprint. Importantly, we are actively pursuing several additional commercial opportunities in the region and remain very encouraged by the level of engagement we're seeing from the operators.

With that overview of the Williston activity, I'll turn the call back to Heath for some closing remarks.

Thanks, Chris. Let's turn to Page 8. So here, we've attempted on this slide to give investors a better sense of Summit's long-term growth trajectory and some key assumptions that support it.

Starting with activity across our G&P segments. We are currently projecting total system well connects in 2026 to come in below the historical averages we've experienced in recent years. We believe this is primarily due to timing impacts brought on by some significant upstream consolidation that involve key customers in our Rockies segment, and a recap that is underway in the Mid-Con segment.

We also believe that the oil price dip below the $60 mark towards the end of last year and first part of 2026 also caused a temporary pause in second half activity, which is still reflected in our current guidance for the year. However, as we look forward with input from our customers, we expect activity levels to climb back up to at least the historical average levels we've experienced over the past 3 years, if not greater, in a low $60 oil and low to mid $3 gas price environment.

Given growing demand for natural gas and a tighter outlook on oil supply, we think this is a conservative but reasonable baseline assumption that has a lot of further upside potential, particularly in the 2028 to 2030 time frame. We should also point out that the outlook includes roughly an $18 million -- or 18 million of MVC-related shortfall payments in the Piceance segment that roll off from 2025 to the second half 2026, and conservatively also assumes no new well connects through 2030.

Moving over to the top right section of the slide. As we've discussed, we expect Permian segment adjusted EBITDA to reach approximately $60 million by 2029 based on the new contracts we've already secured on Double E. If Chris and team were able to fully commercialize the capacity associated with the Double E mainline compression expansion, the Permian segment adjusted EBITDA contribution could grow up to over $90 million by 2030. Combining the Double E growth outlook, along with the Rockies and Mid-Con expected segment growth, we believe Summit's existing portfolio is very well positioned to add more than $100 million of organic EBITDA growth by 2030.

Touching on the capital slide on the lower left-hand section of Page 8, we're forecasting total capital expenditures to trend above our normal $50 million to $70 million range as we execute on these high returning capital investments in the Permian and Rockies segments in 2026 through '28. But we expect capital spending to normalize and transition back to primarily maintenance and well connect capital in the out years.

Taken together, these drivers provide visibility towards very meaningful earnings growth and significant value creation for our shareholders. As I've stated earlier, we're really excited about the growth outlook for the business. But I want to stress that we're also not taking our eyes off the ball by maintaining our financial discipline, continuing our focus on further strengthening the balance sheet, achieving our long-term 3.5x leverage target at SMC and enhancing shareholder returns with a return of capital program. They are all key components that we believe will maximize shareholder value as we execute the business plan.

And so with that, operator, I think we're ready to open the call for questions.

[Operator Instructions] Our first question comes from the line of Mark Reichman with NOBLE Capital Markets.

With new take-or-pay agreements announced, what level of additional commercial commitments is needed to move forward with the mainline compression expansion to 2.4 Bcf per day? And when would a final investment decision to occur?

Yes. Thanks, Mark. And I'm going to let Chris Tennant, our new Chief Commercial Officer, take this one.

Mark, thank you for the question. This is a very attractive project for Double E pipeline with an estimated sub-3x build multiple. We're very hopeful to close half this open capacity early in the open season. CapEx rate depending. If we follow that cadence, we could see an FID decision as early as this summer.

And then would you discuss the capital needs between, say 2026 and 2029 to achieve the $100 million of EBITDA growth by 2030?

Yes, Mark, this is Heath. So look, if you kind of -- set Double E aside, right? If you look at our historical capital, we kind of came out in the range between $50 million and $70 million between growth and maintenance. And we think that that's likely to be kind of what we would spend on the G&P segment businesses throughout the 5-year forecast period.

So really, the kind of the step-up is going to be oriented around Double E. And as Bill pointed out in the call earlier, that capital is largely going to be financed through the new term loan that we put in place at Double E. So just think of it, $50 million to $70 million for our general G&P segment per year. And for the next few years, we'll probably see a similar amount of capital for Double E, roughly in that $35 million a year, Mark, for the next 2 to 3 years.

Yes, Mark, and you can kind of read into the -- we size the delayed draw in the accordion. There's about $100 million of incremental potential borrowings under that new term loan. So that should give you kind of a general sense if we're $30 million to $35 million a year for the next, call it, 2, 3 years, kind of utilizing that $100 million.

I see. That's very helpful. And then with respect to the 2026 guidance of 116 to 126 well connections, which basins and their factors are most likely to drive upside or downside to that outlook? And how sensitive is it to changes in commodity prices?

Yes. No, great question, Mark. And -- so I'll start with a couple of stats, and then I'll give you some color on kind of upside, downside volatility. So to date, we've got 90 DUCs. So that represents a lion's share of that range of well connects already that are drilled but not completed. We also have 7 rigs running, 6 in the Rockies, 1 in the Mid-Con. So those rigs right now, think about them as basically drilling up -- starting to drill up for activity that I'd characterize more as like late second quarter, third quarter type well connects. So between the DUCs and the rigs, we've got a lot of confidence in that range.

In the Mid-Con, as an example, we're only expecting 9 wells in the Arkoma as we sit here today. We only need 3 more to round out that 9. We've already had 6 that came online in the first quarter. And then the Barnett, as an example, all 17 wells are DUCs. Those are slated to kind of come online in the June, July time frame and really just require completion crew to get out there to finish them up. So we spend a lot of time looking at that data when we established our guidance range so that we have confidence in kind of what we're putting out there.

Now as it relates to kind of your upside, downside to the outlook, I'd tell you that -- this plan is based on a $65 kind of strip WTI and about [ 3 40 ] on [ Henry Hub ]. Strip today is $85 on crude and [ 3 70 ] on Henry Hub. In markets like this, historically, we have seen that this price indicator really incentivizes our customers to either accelerate development or try to bring on new well connects. So from an activity perspective, I kind of view -- we're in a period where more upside than downside from a commodity price perspective.

And then lastly, as it relates to commodity price, as you know, in the DJ, we've got percentage of proceeds contracts. If you just run through current strips, so that 85 and [ 3 70 ], that's, call it another -- anywhere from $5 million to $10 million of increased product margin that isn't reflected in our guidance range today. Obviously, there's a lot of uncertainty around what's going on in the Middle East. We thought it was prudent just to kind of keep our conservative assumption around strip. But I think that represents some pretty material upside for us this year based on what we're seeing right now.

Yes. Mark, just to add a little bit to that, too. I think when you think of the range itself, if you kind of accept the producer-driven forecast, which we've had like -- in 2025, we saw some slippage to the right on that, which is why we kind of came in lower. But when you think about 2026, I think just given the commodity price signals that -- and most of the customers we talk to are trying to accelerate that activity. So more likely that they'll hit their timing. They hit their timing, that's generally going to push us to the higher end of the range.

And then the other component -- it's not like you can snap your fingers overnight and get new rigs and new completion crews under contract. But we do know that several folks that were planning wells already for the 2027 time frame are looking to see if they can bring those wells into the fourth quarter. That won't have as big of an impact for the year because you'll be talking probably just 2 to 3 months maybe of contribution, but it will be a good sign as you kind of get some momentum going into 2027 at a minimum.

And then just lastly, following the Double E refinancing and preferred dividend repayment, how are you thinking about the path and time line to reach the 3.5x leverage target? When could the company realistically consider reinstating common shareholder dividends? And would asset sales or joint ventures be part of the deleveraging strategy?

Yes. Look, Mark, what I would say is, I mean, if you just look at the -- for example, the high end of the range, right? If we hit the $265 million mark, we think our leverage will be roughly 3.6x. So I don't think it's out of the question for us to consider a dividend policy over the next 12 months, right? It's highly going to depend on this year and kind of where we end up from an overall leverage perspective. But as you pointed out, the arrears are paid off. So I mean there's -- that's a major step to kind of get out of the way. And I think as soon as we feel comfortable that we're getting to our target and are able to sustain that leverage target, that's when you're going to see us want to turn on a dividend.

Your question around asset sales or JV part of the deleveraging strategy, I would say -- I don't think that those things are going to drive our deleveraging strategy. I think we're going to see that leverage kind of come down as we kind of execute our base plan. But we're very opportunistic. I mean we've -- obviously, we've done quite a bit of M&A both on the sell side and the buy side to optimize the portfolio. So I think when we think about JVs and growth, I think that's where -- those more are likely going to be the triggers to -- on the M&A front.

Our next question comes from the line of Gregg Brody with Bank of America.

Just thinking -- congrats on the Permian contract [indiscernible] the opportunity that's exciting there. I was just thinking about longer term, I know in the past, you've talked about folding the Permian asset into the company. Obviously, this opportunity allows you to delay that. And just curious if you think about, in terms of allocating capital, do you think about contributing capital into the JV to potentially reduce leverage and maybe collapse the unrestricted sub and restricted group? Or how are you thinking about that?

Yes, Gregg, great question. And look, we've talked a lot about that over the years. A couple of things. One, our high-yield bonds, they mature in '29. So I think it's reasonable to expect that sometime in '28, a year or so in advance of that maturity, we would look to refinance that bond.

One thing that we were successful in getting under this new term loan is really a supportive kind of call protection structure. So it's non-call 1 then it steps down to [ 1 0 2 ] in year 2, [ 1 0 1 ] in year 3 and par thereafter. So if we're executing a refi and you get some of this EBITDA growth on these commercial contracts, we can really kind of clean up that term loan and refinance it alongside our bonds in '28 without a bunch of leakage. So that was an important deal point for us when we were negotiating this transaction.

And then, Gregg, as you know, like when you're in a high-growth -- a decent amount of capital spend that really takes 12 to 24 months for that EBITDA to show up, this type of financing is actually a pretty attractive solution just to maintain a delevering profile up at Summit corporate while we're executing on this growth.

Yes, that makes sense. Maybe just you touched -- the question on M&A. It was asked, but I just -- maybe just a little bit more color around the opportunity set today and the activity level we could see over the next year?

Yes. Yes. So Gregg, I would say this. I mean we focused on today's call about the $100 million of organic growth, really to just kind of set the baseline for what's in the plan today, right, where we think this company will go with the existing portfolio, and we're not dependent on M&A to achieve that.

I think -- but one of the key things that we think is important for Summit and our investors is that the business needs to continue to scale up. I think if we can scale up and kind of keep the balance sheet in good shape, we think that's going to dramatically improve the investability of the company. There will be more institutional type investors that would come into the stock and just kind of creates more room, if you will, for investors to come in and invest in Summit.

So I think -- we do think, and we are actively working on opportunities around our portfolio that we can either bolt on synergistic assets and continue to do kind of like what we've done in the past, which is look for assets that are high free cash flow generating that we can buy in at a really attractive valuation and fold it into the portfolio.

Yes. And Gregg, I'd tell you that -- as you know, we spent a lot of time getting this balance sheet to where it is today. As we evaluate M&A, we've been very disciplined looking for things that are at a minimum leverage neutral and value accretive and also focused on high free cash flowing businesses, as Heath mentioned, I don't think you're going to see us really veer off that kind of methodology as we evaluate potential acquisitions.

That concludes the question-and-answer session. Thank you all for your participation on today's call. This does conclude the conference. You may now disconnect.

Good day, and thank you for standing by. Welcome to the Third Quarter 2025 Summit Midstream Corporation Earnings Conference Call. [Operator Instructions] 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 summitmidstream.com, where you'll find it on the homepage, Events and Presentations section or Quarterly Results section. With me today to discuss our third quarter of 2025 financial and operating results is Heath Deneke, our President, Chief Executive Officer and Chairman; Bill Mault, 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 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.

Great. All right. Thanks, Randall, and good morning, everyone. We had a strong third quarter with continued growth across our operating footprint. Adjusted EBITDA was $65.5 million, which is more than a 7% increase from the second quarter and representing roughly $260 million of run rate EBITDA. We also generated $36.7 million of distributable cash flow 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 drilling rigs and more than 90 drilled but uncompleted wells behind our systems. Additionally, volumes on the Double E Pipeline continued 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 the low end of our guidance -- our original 2025 adjusted EBITDA guidance range, primarily as a result of certain well connects 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 end the year around the midpoint of our original well connect guidance range of 125 to 185 wells. We expect the makeup in customer activity during the fourth quarter to drive a significant volumetric and EBITDA growth as we look ahead into 2026.

And finally, we remain encouraged by the level of customer engagement and visibility into 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, Heath, and good morning, everyone. Summit reported third quarter adjusted EBITDA of $65.5 million and capital expenditures of $22.9 million, with the majority of the capital spent in the Rockies and Mid-Con segments related to pad connections and compressor relocations. Year-to-date capital expenditures included approximately $14 million of nonrecurring integration and optimization projects. We expect these projects to be materially complete by the end of 2025. So far this year, we have successfully redeployed 7 latent compressors from the Piceance and 2 from the DJ Basin to the Arkoma 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 EBITDA 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 our available borrowing capacity at the end of the first quarter totaled $349 million, which included $1 million of undrawn letters of credit.

And now on to the segments. The Rockies segment, which is inclusive of our DJ and Williston Basin 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 condensate pricing, partially offset by lower residue gas prices. As a reminder, the Rockies region tends to have 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 7.5% relative to the second quarter, primarily due to first half of 2025 well connections reaching peak production and increased third-party onloads. Liquids volumes averaged 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 Williston and currently have 3 rigs running and about 75 DUCs behind the system.

Before moving on to the other segments, Summit is disclosing some incremental information in its 10-Q 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.

The Permian Basin segment, which includes our 70% interest in the Double E Pipeline, reported adjusted EBITDA of $8.7 million, an increase of $0.4 million, primarily due to higher volume throughput. We continue to expect Double E 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 contract from the recently announced new contract that 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 would correspond to over $40 million of EBITDA net to Summit. The team continues to make good progress commercializing the remaining free float capacity, and we will keep you all updated as the contracts materialize.

As a reminder, if Summit subscribes the full 1.5 Bcf per day of free flow capacity, we would expect Double E to generate approximately $50 million of EBITDA net to Summit. During the quarter, Double E averaged 712 million cubic feet per day of throughput and averaged 745 million cubic feet per day during September. The Piceance segment reported adjusted EBITDA 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 1.5% decrease in volume throughput.

The Mid-Con segment reported adjusted EBITDA 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. The throughput increase was driven by 6 new wells in the Arkoma and 6 in the Barnett, partially offset by natural production declines. Our key customer in the Arkoma is actively running a rig to execute on its 20-well development program, which we expect to drive 5% to 10% volumetric growth in the Arkoma from 2025 to 2026. There is currently 1 rig running in the Arkoma and 1 in the Barnett with 18 DUCs 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 and 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 during our fourth quarter earnings release, and we'll continue to work with customers to firm up second half of '26 development plan.

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

[Operator Instructions] This concludes today's conference call. Thank you for participating. You may now disconnect.

Good day, and thank you for standing by. Welcome to the Summit Midstream Corporation Second Quarter 2025 Earnings Conference Call. [Operator Instructions] Please be advised that today's conference is being recorded. I would now like to turn the conference over to your speaker for today, 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 summitmidstream.com, where you'll find it on the homepage, Events and Presentations section or Quarterly Results section.

With me today to discuss our second quarter of 2025 financial and operating results is Heath Deneke, our President, Chief Executive Officer and Chairman; Bill Mault, 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 can 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, Randall, and good morning, everyone. Thanks for joining us on the call today. So it's been an active first half of the year as we continue to see strong development activity behind our footprint as highlighted by roughly 47 new well connections and continued development from our customer base. We currently have 3 active drilling rigs behind our systems with the fourth expected to come online in the Arkoma later this month.

We reported second quarter adjusted EBITDA of $61 million, which came in slightly below expectations, primarily due to initial underperformance of some wells in the DJ, delays in timing of certain well completions and lower realized commodity prices in the DJ as well.

As we mentioned in our first quarter earnings call, we had some customers defer development given the drop in crude prices earlier this year. And while those prices have rebounded from their -- from the lows earlier in the quarter, these customers have continued to hold to that deferred timing. So as a result, we expect to end the year towards the low end of our adjusted -- our original adjusted EBITDA guidance range.

The good news, however, is that the total well count for the year remains roughly the same and in line with our original expectations. So we should see volumes recover as we move into 2026.

On the commercial front, we executed a new 10-year extension of certain gathering agreements with a key customer in the Williston, which significantly increasing -- or increases our weighted average contract life from 4 to 8 years, and further demonstrates the durability of our business and the long-term value our assets provided to the customers. As part of this extension, we agreed to offer some rate relief in a particular area with significant remaining inventory, which improves our customer's drilling economics and further incentivizes them to drill the inventory. We also picked up additional acreage -- an additional acreage package in close proximity to our existing system, expanding our overall inventory in the basin.

In the Arkoma, our anchor customer is preparing to kick off a 20-well development program, with completions expected to begin in the fourth quarter and continue through mid-2026. This won't have a big impact on 2025 earnings, but these new wells will represent a sizable volume catalyst for our system in '26, and will also provide some additional insight into a pretty exciting dry gas development opportunity adjacent to our existing footprint. The rig should show up in the third quarter, and we will keep you all updated on how things are progressing.

And then in the Permian, I'm happy to share that we have signed a new 10-year precedent agreement for 100 million a day of firm capacity on Double E, which is tied to an expansion of a processing plant in Lea County, New Mexico. The agreement is contingent on the customer's final investment decision to build a new plant, but they are well underway with permitting and have already -- and already have the plant and equipment in inventory.

We are currently expecting that Q4 of 2026 in service date for this new connection. And this is a great step forward to fill up the remaining unsubscribed capacity on Double E and the associated planned lateral extends the Double E system to additional nearby processing plants in Lea County that could be connected in the future.

And finally, on the IR front, we are pleased to be added to the Russell 3000, the Russell 2000 and the Russell Microcap indices during the June reconstitution. This is a milestone that reflects the progress we've made over the past several years to strengthen the business, convert to a corporation and broaden our exposure in the public equity markets. We believe this inclusion will enhance our visibility among institutional investors, increase passive investment, improve liquidity in our stock and broaden our overall shareholder base over time.

With that, I'll turn the call over to Bill to walk through the financial and segment level results in more detail.

Thanks, Heath, and good morning, everyone. Summit reported second quarter adjusted EBITDA of $61.1 million and capital expenditures of $26.4 million, including approximately $5.5 million of maintenance CapEx, with the majority of growth CapEx spent in the Rockies and Mid-Con regions on pad connections and compressor relocations from the Piceance to the Arkoma. As we mentioned previously, we identified an attractive project to move owned latent compression from the Piceance and DJ Basins to the Arkoma to replace leased units, and we kicked off that project in the second quarter. We expect to have all the units in service by year-end and anticipate an increase in EBITDA margin beginning in the first quarter of 2026 as a result.

With respect to SMC's balance sheet, we had net debt of approximately $944 million, and our available borrowing capacity at the end of the quarter totaled $359 million, which included $1 million of undrawn letters of credit.

Now turning to the segments. The Rockies segment, which includes our DJ and Williston Basin systems, generated adjusted EBITDA of $25.2 million, an increase of $0.4 million from the first quarter, primarily due to a 5.4% increase in liquids volume throughput and a 14% increase in natural gas volume throughput following the acquisition of the Moonrise Midstream business on March 10, 2025. This volume growth was partially offset by a reduction in realized commodity prices, lower margin mix and increased operating expenses in the DJ Basin, primarily due to timing of spend and onetime items.

Relative to the first quarter, realized residue gas prices decreased approximately 40%, realized NGL prices decreased approximately 10% and realized condensate prices decreased approximately 15%. These price changes had an estimated adjusted EBITDA impact of approximately $2 million relative to the first quarter.

Volumes on Summit's legacy DJ Basin system, excluding incremental volumes from the Moonrise acquisition, were flat quarter-over-quarter. However, margin mix declined due to higher volume contribution from lower margin contracts, resulting in an estimated $1 million adjusted EBITDA impact.

Additionally, segment operating and general and administrative expenses increased by approximately $4.5 million relative to the first quarter. This was partly due to the acquisition of Moonrise Midstream, but also included approximately $1 million of timing-related items and onetime costs, which we would expect to claw back here in the second half of the year.

Operationally, we remained active during the quarter connecting 38 new wells, and there are currently 2 rigs running and approximately 85 DUCs behind the systems.

The Permian Basin segment, which includes our 70% interest in the Double E Pipeline, reported adjusted EBITDA of $8.3 million, a slight increase relative to the first quarter, primarily due to higher volume throughput. Double E averaged 682 million cubic feet per day of throughput during the second quarter.

The Piceance segment recorded adjusted EBITDA of $10.5 million, a decrease of $1.3 million relative to the first quarter, primarily due to higher operating expenses and a 1.1% decrease in volume throughput.

The Mid-Con segment reported adjusted EBITDA of $24.9 million, an increase of $2.4 million compared to the first quarter, primarily due to a 2.9% increase in volume throughput and higher natural gas sales. The throughput increase was driven by 3 new wells in the Arkoma and 6 in the Barnett, partially offset by natural production declines.

In July, we connected 6 new wells in the Arkoma and 4 new wells in the Barnett, which had been held in DUC inventory since 2023. We continue to see strong well results in the Mid-Con, exceeding our internal expectations. And as Heath already mentioned, we're extremely excited about the incremental development expected in the Arkoma later this year and into 2026.

There is currently 1 rig running in the Barnett with another expected in the Arkoma later in the third quarter and 17 DUCs behind the system.

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

Thanks, Bill. So look, in closing, while we expect to end the year towards the low end of our original adjusted EBITDA guidance range, we see this as primarily timing related, and we remain very optimistic about the outlook for the company. Our development activity across our footprint remains strong, and we're excited about the commercial progress we're making in the Rockies, the Double E and Mid-Con segments. I remain confident in the underlying fundamentals of our operations, the strength of our asset base and the continued organic and M&A growth opportunities ahead.

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

[Operator Instructions] And at this time, I'm not seeing any questions in the queue. So that does conclude today's conference call. Thank you so much for joining. You may all disconnect.