Summit Midstream Partners, LP (NYSE:SMLP) Q4 2022 Earnings Call Transcript

Bill Mault: Yes. And Gregg, I’d just add to that while we’re seeing some decent growth behind our footprint, when we look at kind of the aggregate level of activity of our key customers, this isn’t necessarily suggesting growth from their perspective, probably more maintenance-related activity levels. And when you look at the Utica in general over the past, call it three years, rig counts have been actually fairly steady. You didn’t see kind of that dramatic increase in rig count like you did in the Haynesville, so a lot of these producers are really just kind of keeping volumes in maintenance mode. And I think this year is a little bit of a tailwind for Summit that more of that activity is hitting our systems than some of our competitors from a midstream perspective over the past couple of years.

Gregg Brody: That’s consistent with we see, so we cover a lot of those Northeast guys on the E&P side. I’m curious about maybe in your other basins. What do you €“ what are you seeing there for 2024 or what you kind of think about it?

Heath Deneke: Yes. I mean it’s hard to speculate on now. Again, I think in a $3-plus gas price environment, I would expect to see the programs that our customers, for example, in the Piceance are working on. They’re getting €“ I think we have over 200 wells that and the process is getting permitted, and we’re working with them on the infrastructure to be able to connect and flow those wells. And so in our 2023 guidance, we have shifted some of those volumes and well connect activity out and some have €“ we’ve actually kind of moved that would likely go back into 2024. So we try to reflect that a bit in 2023, but like I said, I think it’s really just going to depend on longer-term, that we start seeing a little bit more recovery in the gas price that than what we’re seeing here in 2023. .

Bill Mault: Yes, Gregg, in the Barnett too, we’ve got TOTAL is one of our large customers. We’ve got a private equity backed customer out there. TOTAL has various uses for that gas, whether it’s on the electric generation side or LNG exports. So I think there’s a little bit of different equation for a producer like that. But again, I think in a $3-plus environment, given the proximity of the Barnett kind of basis differentials in that area, we think that will continue to support activity. But I think as Heath mentioned, where we’re seeing prices today is a bit of an anomaly given how warm-able winter we had.

Gregg Brody: Great. And last, I appreciate that, and I know it’s very early, but I appreciate your perspective. Just last one. M&A, can you talk about the opportunity set? Do you think it’s €“ there is a lot to do? You alluded to it in your press release. Maybe you can give a little color around that.

Heath Deneke: Yes. I mean, look, it’s clearly not our focus in 2023. We do see a fair amount of good opportunities like we did with the Sterling and Outrigger system. There’s more of that around our footprint. But the focal point here is to continue to build liquidity and reach our target debt levels. So with that being priority number one, yes, if we can execute on a deal that improves our credit metrics and €“ or a divestiture that we could sell and accelerate delevering in a non-core system, we’ll certainly continue to look at those things. But I don’t think our intent today or at least what we’re staring at today, we kind of feel like we’ve got a really solid portfolio. We’ve got a lot of activity. We’re seeing a fair amount of a lot of growth actually this year on system.