Shares of Summit Midstream Corporation (SMC – Free Report) have lost 2.8% since reporting earnings for the fourth quarter of 2024. This compares with the S&P 500 index’s 0.8% decline over the same time frame. Over the past month, the stock price has decreased 14.9% compared with the S&P 500’s 9.1% fall.
Earnings Performance
Summit Midstream reported a fourth-quarter 2024 adjusted loss per share of $2.19, wider than a loss of $1.29 in the prior-year quarter.
The company’s total revenues declined 16% year over year to $107 million, primarily driven by lower gathering services revenues. Adjusted EBITDA for the quarter stood at $46.2 million, down 38.4% from $75 million in fourth-quarter 2023. For 2024, adjusted EBITDA declined 23.3% to $204.6 million from $266.8 million in 2023.
Segmental Performance
Rockies Segment: Adjusted EBITDA was $23.2 million, down 1.6 million from the third quarter of 2024 due to lower liquids throughput and water sales despite a 2.3% increase in natural gas volumes.
Permian Segment: Adjusted EBITDA fell 9.0% year over year to $7.8 million, impacted by lower volumes on the Double E pipeline.
Piceance Segment: Adjusted EBITDA declined 26.8% year over year to $11.8 million, with a 2.5% drop in volumes and higher operating expenses.
Mid-Con Segment: Adjusted EBITDA skyrocketed 122% quarter over quarter to $12.8 million due to the Tall Oak Midstream acquisition in December and a 29% increase in throughput.
Key Business Metrics
The company connected 23 wells in the fourth quarter, contributing to 156 well connections for the full year. SMC’s natural gas throughput on wholly-owned operated systems increased 10.5% sequentially to 737 million cubic feet per day (MMcf/d), whereas liquids volumes declined 2.9% to 68 thousand barrels per day (Mbbl/d). The Double E pipeline transported 613 MMcf/d in the quarter, generating $7.8 million in adjusted EBITDA.
By segment, the Mid-Con region saw a 29% sequential increase in volume throughput, driving adjusted EBITDA growth of 77% to $12.8 million, benefiting from the Tall Oak Midstream acquisition. In contrast, the Rockies segment posted a 6.5% EBITDA decline to $23.2 million due to lower liquid volumes and freshwater sales. The Piceance segment reported an 8.5% decline in adjusted EBITDA to $11.8 million, whereas the Permian segment saw a 1.6% drop to $7.8 million due to reduced throughput on the Double E pipeline.
Management Commentary
CEO Heath Deneke emphasized that 2024 was a “transformational year” for SMC, citing key initiatives such as the $700-million divestiture of the Northeast segment, balance sheet refinancing and corporate restructuring from a master limited partnership to a C-Corp. The company also closed the Tall Oak Midstream acquisition in December, increasing its exposure to gas-oriented assets positioned to meet growing Gulf Coast LNG demand.
Looking ahead, management expects to maintain financial discipline while pursuing accretive acquisitions to scale the business. Notably, the company reinstated cash dividends on its Series A preferred stock, a move seen as a precursor to resuming common stock dividends in the future.
Factors Influencing Results
The company’s financial results were impacted by a 26.7% year-over-year decline in gathering revenues to $49.6 million. The reduction was partially offset by a 1.7% increase in natural gas, NGLs and condensate sales, which totaled $49.7 million for the quarter. Higher transaction costs of $17.8 million weighed on the bottom line.
On the cost side, operating and maintenance expenses rose 10.2% year over year to $28 million, whereas general and administrative expenses increased 38.7% to $14.2 million. However, depreciation and amortization expenses declined 20.9% to $25.3 million.
2025 Guidance
For 2025, SMC expects adjusted EBITDA of $245-$280 million, reflecting anticipated volume growth and contributions from recent acquisitions. The company projects a total capital expenditure between $65 million and $75 million, of which $15-$20 million is earmarked for maintenance capital.
Well connections are expected to be 125-185, with 75% of new wells located in crude oil-oriented areas and 25% in natural gas-focused regions. The company forecasts natural gas throughput of 900-965 MMcf/d and liquids volumes of 65-75 Mbbl/d.
Other Developments
SMC continues to expand its asset base with the acquisition of Moonrise Midstream in the DJ Basin, announced on March 10, 2025. The $90-million deal, financed through a mix of cash and equity, adds 65 MMcf/d of processing capacity to SMC’s Rockies operations. Management expects the acquisition to alleviate capacity constraints in the DJ Basin and drive long-term growth.
The company executed a $250-million add-on to its second-lien secured notes in January, using the proceeds to repay a portion of its ABL revolver borrowings. Following this transaction, SMC reported a total leverage ratio of 3.9X at 2024 end, with a long-term target of 3.5X.
Summit Midstream’s 2025 strategy focuses on integrating recent acquisitions, maintaining financial flexibility and positioning itself for growth opportunities. While the company faces near-term headwinds, management remains optimistic about its ability to generate free cash flow and reduce debt, paving the way for shareholder returns in the coming years.
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