Summit Midstream Corporation Q2 2026 Earnings Call - Guidance Raised on Rockies Activity Surge and Double E Momentum

Operator: Good day, and welcome to the second quarter 2026 Summit Midstream Corporation earnings conference call. At this time, all participants are in listen only mode. After the speaker’s presentation, there will be a question and answer session. To ask a question, you will need to press star 11 on your touchtone telephone. Please note this call is being recorded. I would like to turn the call over to Randall Burton. Please go ahead.

Randall Burton, Investor Relations, Summit Midstream Corporation: 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 2026 financial and operating results is Heath Deneke, our President, Chief Executive Officer, and Chairman, and 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, 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 defer 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. With that, I’ll turn the call over to Heath.

Heath Deneke, President, Chief Executive Officer, and Chairman, Summit Midstream Corporation: All right. Thanks, Randall, and good morning, everyone. Well, Summit announced strong second quarter results today with Adjusted EBITDA of $60.7 million, which is a 12% increase relative to the first quarter. The second quarter increase was driven by growth in both our Rockies and MidCon segments. As we look ahead to the rest of the year, we are very encouraged with the level of activity we are experiencing across our systems, and we’re seeing our customers accelerate plans to bring on new wells that are expected to be turned in line towards the end of 2026. Additionally, as we’ll discuss further in the call, we have a lot of continued commercial momentum in the Rockies and the Permian segments as we keep securing new contracts to support very attractive, high-returning expansion projects.

Touching on the second quarter a bit more, we turned in line 36 wells, 16 in the DJ and 20 in the MidCon. Right after the quarter closed, we brought on another 17 wells in the Williston, and we now have roughly 75 drilled but uncompleted wells across the footprint. It is exciting to see our customers responding to the higher crude price environment, as we speculated could occur back in our earnings call back in May. We now have a total of eight rigs running behind our Rockies system, which by the way, is up from five in the previous quarter. And six of those rigs are in the Williston. And I would tell you that is a level we are excited about. We have not seen in several years in the basin.

Part of that activity pick up in the Williston is existing customers accelerating their programs in a stronger crude environment. But part of it is also our commercial success. As we previously announced, we have secured two new gathering agreements in Divide County during the first half of the year. Both of the new customers have a rig running behind the system today. And as a result, we now have visibility to approximately 30 new well connections in the Williston that were not contemplated when we set our guidance for the year. These are weighted towards the fourth quarter, so we do expect limited volume contribution in 2026, but they do position us for a very strong start as we look into 2027.

In the DJ, we also see our customers ramping up plans that we expect will be a big catalyst for late 2026, early 2027 as well. We recently signed a new 20-year extension of a gathering processing agreement with one of our existing anchor customers in the basin, and we are also working with other customers to potentially dedicate new acres to our growing DJ footprint. It is really an exciting time to see this level of activity ramping up in the Rockies segments and what that means for the future. On Double E, we executed additional firm transportation agreements during the quarter, which brought total contracted volume on the pipe to just over 1.9 Bcf per day.

We continue to see a tremendous amount of customer interest in the mainline compression expansion open season, and we have extended that open season now through the end of August as we work to finalize additional firm transportation agreements that will support the project. We expect to be in a position to make a final investment decision prior to the open season conclusion, and we will provide updates as they become available. Just to mention the MidCon segment, one of the highlights there is that we are very encouraged with the performance of new wells that have recently been turned in line in an emerging dry gas region within our Arkoma footprint. This again is a development that could be a major catalyst for the segment as in 2027 and beyond.

And finally, before handing the call over to Bill, I’d like to hit on guidance real quick. You know, as we said, we’ve had a solid first half in the books, and we now have a far better line of sight into second half volumes than we did back in March with the activity level now accelerating as well across the footprint. As a result, we are tightening our full year 2026 Adjusted EBITDA guidance to a range of $235 million-$255 million. We are also raising full-year capital expenditure guidance to $100 million-$120 million, which is inclusive of the contributions to the Double E JV. Look, the first driver of that capital increase is the approximate 30 new wells that we talked about earlier in the call, which were not part of our original plan.

As well as the second, I guess, would be the incremental capital at Double E, which is tied to the new firm transportation agreements that we executed this year. As a reminder, that Double E capital will be funded through our new term loans that we executed earlier in the year. Look, both of these increases in expenditures are going to be really high returning dollars and tied to activity that is either contracted or committed. In both cases, we see that the earnings benefits will start showing up in 2027. With that, I’d like to turn the call over to Bill now to walk through the financials.

Bill Mault, Chief Financial Officer, Summit Midstream Corporation: Thanks, Heath, and good morning, everyone. Summit reported 2026 Adjusted EBITDA of $60.7 million, Distributable Cash Flow of $36.8 million, and Free Cash Flow of $9.4 million. Total capital expenditures were $25 million for the quarter, inclusive of $4.1 million of Maintenance CapEx, with the majority of capital directed toward pad connections in the Rockies and Mid-Con segments. With respect to Summit’s balance sheet, we ended the quarter with $21 million of unrestricted cash and $79 million drawn on our revolver, with approximately $418 million of available borrowing capacity after accounting for $2.7 million of undrawn letters of credit. Total leverage at the end of the quarter was approximately 4.1 times, and the Summit Permian Transmission term loan had a balance of $350 million at quarter end and remains non-recourse to Summit.

With all the commercial progress and our expectation to FID compression in the near term, we are also working with our financial partner at Summit Permian Transmission to secure the $50 million uncommitted accordion to support the compression expansion project. During the quarter, we also began executing on the $35 million share repurchase program authorized by the board, repurchasing approximately 35,000 shares for $1 million. As of June 30, we had approximately $34 million of remaining capacity under the program. Now on to the segments. The Rockies segment generated Adjusted EBITDA of $30.4 million, an increase of $4 million relative to the first quarter of 2026, driven by a 6.3% increase in liquids volume throughput and higher realized crude oil and NGL prices, partially offset by a 3% decline in natural gas volume throughput.

Liquids volumes averaged 68,000 barrels per day, and natural gas volumes averaged 162 MMcf per day during the quarter. Realized crude oil prices and composite NGL prices were both up approximately 30% quarter-over-quarter, benefiting both our customers and Summit’s earnings associated with percentage of proceeds contracts in the DJ Basin. We connected 16 wells in the DJ Basin during the quarter. Subsequent to quarter end, we connected an additional 17 wells in the Williston Basin, including nine wells for which we provide both crude oil and produced water gathering services. Just as a reminder, the water to crude ratio in this area of the Williston is approximately 3 barrels to 1. So these wells are extremely impactful to volume throughput.

While those nine wells are still ramping, through August to date, they’ve averaged approximately 15,000 barrels per day of combined crude and produced water throughput. We are excited about the growth trajectory of this segment, not only from the acceleration of activity, but continued delineation and development of the significant remaining inventory in both Williams and Divide counties. Additionally, in the DJ, Peoria Resources, who entered the basin acquiring Verdad earlier this year, announced the acquisition of Fundare Resources last week. As you know, Fundare is a key customer behind the Moonrise Midstream asset that we acquired back in March of 2025, and this transaction offers Peoria additional contiguous acreage to drill longer laterals, drive down break evens, and fully develop the resource behind the Moonrise processing plant. There are 8 rigs currently running behind the systems, 6 in the Williston and 2 in the DJ, with approximately 75 DUCs.

The Permian segment reported Adjusted EBITDA of $9.4 million, an increase of $0.6 million relative to the first quarter, driven by a 6.7% increase in Double E volume throughput, with Double E averaging 859 MMcf per day of throughput during the quarter. The Piceance segment reported Adjusted EBITDA of $8.7 million, a decrease of $0.9 million relative to the first quarter, primarily due to a 5.7% decline in volume throughput, driven by continued temporary shut-ins from low regional gas prices, natural production declines, and no new well connections during the quarter. However, as of the end of July, all of the previously shut-in production had begun flowing. Finally, the Mid-Con segment reported Adjusted EBITDA of $21.4 million, an increase of $2 million relative to the first quarter, primarily due to a 9.9% increase in natural gas volume throughput to 523 MMcf per day.

This was driven by 17 new Barnett wells and 3 new Arkoma well connections during the quarter. These wells are either performing in line or slightly above our expectations, and we are encouraged with how long these wells are holding production before starting their initial declines.

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

Heath Deneke, President, Chief Executive Officer, and Chairman, Summit Midstream Corporation: All right. Thanks, Bill. To wrap up, we are very excited about the trajectory of the business through the remainder of 2026 and into 2027 as well. Volumes are growing and customer activity behind our systems is accelerating. As we have laid out in our recent investor presentation, the business is poised to deliver over $100 million of organic growth by 2030, which is driven by the Rockies and Permian segments primarily. Look, all of this you can see materialize in real time when you look at the commercial success that we are having, along with the development activity levels that we are experiencing.

Our current focus is completing a successful conclusion to the Double E compression expansion open season in the coming weeks, as well as staying ahead of our customers in the Rocky segment with our WellConnect programs that will enable our customers to even maybe further accelerate their development activity. On the corporate front, we continue to make progress towards achieving our 3.5 times leverage target and making our goal of resuming a common dividend in the near future a reality. We think the combination of Summit’s robust growth outlook, our current and projected high free cash flow yield, our improving balance sheet, and our current valuation all provide a very clear and compelling value proposition for new and existing investors in Summit. With that, I would like to thank everyone for joining the call, and I look forward to answering questions.

Operator, please open the call for questions.

Operator: Thank you. As a reminder, if you would like to ask a question, please press star 1 1. If your question has been answered and you would like to remove yourself from the queue, press star 1 1 again. Our first question comes from Mark Reichman with Noble Capital Markets. Your line is open.

Mark Reichman, Analyst, Noble Capital Markets: Thank you. How much incremental Adjusted EBITDA could the 30 new Williston Well Connections contribute in 2027? How should we think about the broader growth opportunity in the basin beyond those wells?

Bill Mault, Chief Financial Officer, Summit Midstream Corporation: Good morning, Mark. Thanks for joining. The 30 incremental wells we are talking about, Mark, I would view that as somewhere around $10 million of EBITDA contribution just from that development. Now, obviously those 30 wells are coming online, call it late Q4, early Q1. We would expect additional activity to transpire for the remainder of 2027 in the Williston. It is a little early, relative to producer guidance, but if you just think about that 15,000 barrel a day increase from the nine crude and water wells, we are talking about sizable volumetric growth, relative to kind of a print this quarter on liquids volume. We have talked about some of that volumetric sensitivity that we include in our investor deck. I think what we are seeing, we are trending towards that higher end of the, call it, 10-ish percent kind of volumetric growth, under this type of cadence.

Heath Deneke, President, Chief Executive Officer, and Chairman, Summit Midstream Corporation: Mark, just one other thought to add there as well. If you think about the producers behind these new We signed, what, 240,000 acres worth of new dedications to the system in the first half of the year, and a lot of their plans were developed off of a crude strip that was materially below where we are now. I think, if crude holds kind of in this current range that we are in now, I would actually expect to probably see some additional acceleration or maybe additional rigs being added on the acreage position. We think we have a lot of upside. Also, just given our position in Divide and Northern Williams County, I think we have got additional targets out there that we think we may be able to bolt on some additional customers as well.

So pretty exciting growth up here, in the wells and good to see on our system.

Mark Reichman, Analyst, Noble Capital Markets: Well, that’s very helpful. What remaining commercial commitments are necessary to reach FID on the Double E compression expansion? I’m just looking at that slide in your slide deck on page seven where you kind of step through the volumes and the financial contribution. Maybe you could talk a little bit about that and maybe the incremental EBITDA that you expect if the project proceeds.

Chris Tennant, Senior Management, Summit Midstream Corporation: Yeah, Mark, this is Chris Tennant. I appreciate the question. We’re putting the final touches on two FTA agreements right now that’ll push us over the FID hurdle here in the next couple of weeks. The FID case will give us right at a sub 6x build multiple. The asset is in a great position, and we feel very confident about fully contracting it. As we contract the remaining capacity, we’ll see that build multiple go to a 3x or lower build multiple. So we’re really excited about that and feel very confident in our contracting and the position around Double E.

Heath Deneke, President, Chief Executive Officer, and Chairman, Summit Midstream Corporation: Yeah.

Bill Mault, Chief Financial Officer, Summit Midstream Corporation: Mark, to bridge the gap on kind of the page you’re looking at in the investor deck. We’re showing kind of 70 million of existing contracts, and then with compression, 90-plus million of EBITDA. Think about that FID case being somewhere kind of in between those, to get kind of baseline economics for us to make the decision to FID. The goal and our expectation would be to fully commercialize the remaining capacity by the end of the year.

Mark Reichman, Analyst, Noble Capital Markets: Okay. That’s really helpful. With the Piceance MVC shortfall payments expiring at the end of the third quarter, how should we think about the segment’s normalized EBITDA beginning in the fourth quarter and into 2027? I was just wondering if the return of the previously shut-in production and future drilling might offset the loss of the MVC-related earnings, or should we expect a step down in cash flow?

Bill Mault, Chief Financial Officer, Summit Midstream Corporation: Yeah. Mark, you should expect a step down in cash flow starting in the fourth quarter. Just to provide some high-level numbers, think of that as there’s roughly $4 million of shortfall payments a quarter.

That segment did around 8.5, 8.6 million this quarter. So you’re somewhere around 4 to 4.5 million of flowing EBITDA, which will give you a good run rate for 2027. Longer term, Mark, and we can get into this in more detail if you’d like, but longer term in our long-term outlook, the $100 million of EBITDA growth through 2030, we’re really not expecting any development in the Piceance under that forecast. I do think that’s conservative. I think there are things like the data center build-out, in that entire Rockies area as well as Canadian LNG. We really need some gas demand to offset some of the Canadian associated gas that’s flooding the market in which these producers sell into on the residue gas side. There’s a lot of inventory, there’s a lot of upside, but we’re not banking on it in our long-term outlook.

I do think we’re being a bit conservative long term from that perspective.

Mark Reichman, Analyst, Noble Capital Markets: Okay. Adjusted EBITDA for the first half was $115 million, and you narrowed your guidance. The midpoint remains $245 million. What could drive results towards the upper end of the range or even the lower end of the range? It is a pretty tight range to begin with, I guess.

Heath Deneke, President, Chief Executive Officer, and Chairman, Summit Midstream Corporation: Yeah. Mark, this is Heath. Look, we think we are at the midpoint plus, is how I would describe the way things are set up right now. The low end, I would say, there would have to be a pretty dramatic drop in commodity values. Most of the activity, frankly, even third quarter activity, a lot of that is already been turned online or about to be turned online. The fourth quarter wells are really slanted more towards December than they are early in the quarter. I think activity-wise, I think we are pretty nailed down here. I guess, if we had some significant underperformance of wells, that might skew the numbers down a little bit. But I think we have got upside beyond the midpoint, and that probably more than offsets any kind of risk to the downside in my view. So lots of good momentum here to hold on to.

Mark Reichman, Analyst, Noble Capital Markets: Yeah. I was encouraged to see the rebound in the MidCon compared to the first quarter of this year. The last question I had is just-

Heath Deneke, President, Chief Executive Officer, and Chairman, Summit Midstream Corporation: Those were the dry gas wells, by the way.

Mark Reichman, Analyst, Noble Capital Markets: Huh?

Heath Deneke, President, Chief Executive Officer, and Chairman, Summit Midstream Corporation: I said those were the dry gas wells, by the way. They came online. It really pushed volumes up, just by the way.

Mark Reichman, Analyst, Noble Capital Markets: Yeah.

Heath Deneke, President, Chief Executive Officer, and Chairman, Summit Midstream Corporation: Really excited about those. They’re big wells.

Bill Mault, Chief Financial Officer, Summit Midstream Corporation: Yeah. Mark, that’s something that as you think about the sensitivity for 2026, what is pretty compelling so far. Look, a handful of the wells have been on for, call it 2, 3 months now, but they’re really hanging in. We haven’t seen the initial decline profile kickoff yet. So it’s encouraging. They’re big wells. I do think it really illustrates the earnings potential of that segment with pretty modest amount of activity.

Heath Deneke, President, Chief Executive Officer, and Chairman, Summit Midstream Corporation: Based on the rigs, too.

Mark Reichman, Analyst, Noble Capital Markets: Right. The last question I have is just, how do you rank debt reduction, organic growth investment, share repurchases, and then the potential reinstatement of the common dividend, when you’re thinking about allocating incremental free cash flow? I know your longer term leverage target’s 3.5. I think you were at 4.1 at the quarter end. What might be your medium term leverage target?

Heath Deneke, President, Chief Executive Officer, and Chairman, Summit Midstream Corporation: Yeah. Well, look, I think you actually got the order correct in terms of how we think about them, Mark Reichman. I think definitely getting to our leverage target, which, look, we continue to feel really good about. If the momentum picks up or continues like what we’re seeing right now and the activity levels behave as we do, I think in 2028, we could potentially get there. There are a few catalysts that could even accelerate that. But somewhere we think in the next 18 months is not an unreasonable assumption in terms of getting to our target. But look, we do have a lot of growth opportunity, and I do think that’s something that we are focused on. I think fortunately with Double E, ton of growth going on there, but we’ve got all of that capital already spoken for in a term loan that we put downstairs.

We don’t expect to see a big ramp-up in our base business or our non-Double E capital. It probably will hang in there in around the 50-ish mark or so. So I think we’re going to see some continued high free cash flow coming out, continuing to pay down debt. Yeah, I think we’re eager to get a return on capital program underway here.

Mark Reichman, Analyst, Noble Capital Markets: Yes.

Heath Deneke, President, Chief Executive Officer, and Chairman, Summit Midstream Corporation: We’re definitely focused on it.

Bill Mault, Chief Financial Officer, Summit Midstream Corporation: Mark, obviously, we think the stock is undervalued, particularly when you take into context trading multiples relative to our peers. The balancing act here, we think that obviously scale, getting leverage to our target, turning on dividend policy are more meaningful ways to bridge that value gap, versus just buying back stock out of the market. So think about it as what we think has the potential to drive a more intrinsic value of the stock longer term, and that buyback program is truly just giving some of the float and liquidity, is really there to help support in downside days. Right? So when the Iran conflict, when they got to resolution a month or so ago, there was a lot of volatility in the energy sector. That is when we put that buyback program to work and helped support the stock and provide some liquidity to investors.

Heath Deneke, President, Chief Executive Officer, and Chairman, Summit Midstream Corporation: Hey, Mark, sorry, just to make sure I was clear because I think I said ’28, but what I meant to say and what I hoped I said was the next 12 to 18 months. So think about towards the mid-half, second half of 2027 to the first half of 2028 is, I think, when we expect to get there.

Mark Reichman, Analyst, Noble Capital Markets: Okay. No, that is very helpful. Well, thank you very much. I really appreciate it.

Operator: Thank you. Our next question comes from Jason Gabelman with TD Cowen. Your line is open.

Jason Gabelman, Analyst, TD Cowen: Yeah. Hey, thanks for taking my questions. First, just on the full year EBITDA guide, I am wondering if the second-half guide contemplates any of the commodity strength we have seen the first half of the year.

Bill Mault, Chief Financial Officer, Summit Midstream Corporation: Yeah. Good question and thanks for joining, Jason. I would tell you that, think about it in, call it the 70s on crude-ish and a normalized NGL. We tend to update with strip, but if we are continuing to see pressure on that crude price to the upside, that is another example, Jason, of what could push us towards the higher end of the range on our tightened range.

Jason Gabelman, Analyst, TD Cowen: Mm-hmm. Got it. Going back to the Bakken and encouraging to see the additional rigs being added to your acreage. Do you have a sense of your customers, your producer customer sensitivity to commodity prices? It has obviously been a really volatile tape, but if oil prices

Bill Mault, Chief Financial Officer, Summit Midstream Corporation: Yeah

Jason Gabelman, Analyst, TD Cowen: trend back down to $70-$75, would you expect to sustain the same amount of rig activity?

Bill Mault, Chief Financial Officer, Summit Midstream Corporation: Yeah, I don’t think 70 to 75, Jason, really moves the needle from a development perspective. We are putting capital work out here. I tell you, our team does a lot of work on half-cycle returns and not at the banker 10% type PVs. We’re talking 20, 30% returns we think are doable in, call it the mid to high, call it 50s, 55 to maybe low 60s, for that acreage. And you got to remember, a lot of what they’re doing up there are three-mile laterals, so they’re getting improved efficiencies on their breakevens and their D&C costs, which is really enabling this acreage and probably the lockstep change of what we’ve seen out here over the past three, four years.

Jason Gabelman, Analyst, TD Cowen: Mm-hmm. Then maybe one follow-up on the M&A landscape. Just curious on your thoughts on what you’re seeing on bolt-on opportunities, particularly in the Rockies region, both the DJ and the Bakken.

Heath Deneke, President, Chief Executive Officer, and Chairman, Summit Midstream Corporation: Look, a general comment, I would tell you, we’re pretty disciplined on the M&A front. We’ve got a lot of organic growth ahead. We’re certainly mindful of achieving our leverage target, and we have seen some M&A get a little frothy, frankly. We participated in some processes, and we stayed disciplined and let some assets go that we would’ve liked to have. But frankly, we’re probably more excited about the organic growth profile and Double E and potentially some additional organic opportunities that we’re in the midst of developing that provide growth beyond what we’re even forecasting in our longer-term outlook.

Jason Gabelman, Analyst, TD Cowen: All right. Great. Thanks for the answers, guys.

Heath Deneke, President, Chief Executive Officer, and Chairman, Summit Midstream Corporation: You bet.

Bill Mault, Chief Financial Officer, Summit Midstream Corporation: Thank you.

Heath Deneke, President, Chief Executive Officer, and Chairman, Summit Midstream Corporation: Thank you.

Bill Mault, Chief Financial Officer, Summit Midstream Corporation: Thanks for picking us up, too.

Operator: Thank you for your participation. This does conclude the question and answer session, and you may now disconnect. Everyone, have a great day.