What Summit Midstream Partners (SMC) Said on Its Q3 Earnings Call

Key Points

• Summit raised its 2026 adjusted EBITDA guidance to $250 million–$260 million, from $235 million–$255 million, after third-quarter adjusted EBITDA rose 16% sequentially to $70.7 million. The improvement was driven in part by a 39.7% increase in Rockies liquids throughput.
• Management sees growth from continued customer activity and infrastructure investment: it expects to connect 200–250 wells in 2027, while the planned Double E expansion could lift capacity to Waha by 50%. Summit projects mid- to high-teens annual adjusted EBITDA growth over the next several years, subject to customer plans and volume assumptions.
• A dividend may be considered early next year as leverage moves toward Summit’s approximately 3.5x threshold; net leverage was about 3.9x at quarter-end, with management expecting 3.6x by the end of 2026. Any initial payout would likely be small to preserve funding for growth.

Summit Midstream Partners NYSE: SMC raised its 2026 earnings guidance after a jump in Rockies liquids volumes helped lift third-quarter adjusted EBITDA 16% from the previous quarter. Management also said it could begin considering a common dividend early next year as leverage approaches its long-standing target.

Summit reported adjusted EBITDA of $70.7 million for the quarter, up from the second quarter and approximately $16.5 million higher than in the first quarter, President, CEO and Chairman Heath Deneke said on the earnings call. The company connected 51 wells across the Williston and DJ basins during the quarter.

Management raised its full-year adjusted EBITDA guidance to $250 million to $260 million from $235 million to $255 million. It maintained its capital expenditure outlook, including Double E, at approximately $100 million to $120 million.

Rockies activity drives quarterly growth

The Rockies segment generated $40 million in adjusted EBITDA, up $9.6 million from the second quarter, CFO Bill Mault said. Liquids throughput rose 39.7% to an average of 95,000 barrels per day, while natural gas volumes averaged 168 million cubic feet per day.

Of the wells connected in the quarter, 32 were in the Williston Basin and 19 were in the DJ Basin. Mault said nine Williston wells received both crude oil and produced-water gathering services, contributing meaningfully to the increase in liquids volumes.

Deneke said Summit expects to connect 200 to 250 wells across its systems in 2027, supporting year-over-year volume and EBITDA growth. Seven rigs were running behind Summit’s systems, and the company cited an inventory of approximately 140 drilled but uncompleted wells.

In the DJ Basin, Summit expects existing processing plants to fill by the end of 2027 based on customer development plans. The company is evaluating a brownfield expansion at its Jackson Lake processing complex and working on additional commercial contracts to support a potential final investment decision, Mault said.

Deneke said Rockies segment adjusted EBITDA could grow at a compound annual rate of as much as 30% over the next two years if customer plans and activity levels hold.

Double E expansion and longer-term outlook

Summit’s Permian segment reported $11.2 million in adjusted EBITDA, up $1.8 million sequentially. Double E throughput rose 16.6% to an average of 1 billion cubic feet per day, Mault said.

Deneke said the planned Double E mainline compression expansion is expected online by the end of 2028. It would increase mainline and delivery capacity to Waha by 50%, while providing more bidirectional capacity. Summit expects Permian segment adjusted EBITDA to rise from approximately $40 million in 2026 to more than $100 million in 2029.

Responding to an analyst’s question, Mault said capital for contracted work, including compression, is expected to total $130 million to $140 million net to Summit. Over the next 18 to 24 months, Summit expects to reinvest Double E distributions and use an accordion feature on the Summit Permian Transmission credit facility to help fund growth. Mault said the asset could become a significant free cash flow generator in the 2028–2029 period, though additional projects remain under consideration.

Across the company, Deneke said the Rockies and Permian outlook, together with steady Mid-Con activity, could support mid- to high-teens annual adjusted EBITDA growth over the next several years. He said the projection relies on customer drilling and development plans, as well as assumptions about volumes and capital programs. Mault noted that it includes Double E reaching more than $100 million of EBITDA net to Summit.

Leverage target and dividend considerations

Summit ended the quarter with total net leverage of approximately 3.9 times and expects to finish 2026 at about 3.6 times. The company has said it would not initiate a dividend until reaching a leverage ratio of approximately 3.5 times.

Deneke said management expects to begin considering a dividend policy early next year, subject to board processes and the company’s progress. Any initial dividend would be relatively small, he said, leaving room to fund organic growth and potentially increase the payout over time.

Quarterly distributable cash flow was $32.6 million and free cash flow was $5.2 million. Summit ended the quarter with $12.5 million in unrestricted cash and approximately $417 million in available revolving credit capacity after accounting for undrawn letters of credit, Mault said.

Commodity prices and other segment results

Deneke said current customer development projections appear resilient to commodity price changes, although crude falling below $60 per barrel could prompt adjustments. He said customers have largely locked in activity for the next 12 to 24 months and that many private customers have hedged to secure higher prices.

Mid-Con adjusted EBITDA rose $1.4 million sequentially to $22.8 million as natural gas volumes increased 7.3%. Piceance adjusted EBITDA fell $0.4 million to $8.3 million as higher operating expenses offset increased throughput. Mault cautioned that minimum-volume commitments underpinning the PEONs gathering agreements expired at the end of the quarter; related shortfall mechanisms contributed $4.1 million of adjusted EBITDA in the period.

On acquisitions, Mault said Summit expects to slow its pace as asset transaction multiples have risen, while continuing to evaluate opportunities. The company instead has a pipeline of organic projects, some with estimated build multiples below five times, he said.

About Summit Midstream Partners (NYSE:SMC)

Summit Midstream Corporation, formerly Summit Midstream Partners, is a midstream energy company that provides infrastructure and services to natural gas and crude oil producers. Its operations include gathering, compressing, treating and processing natural gas, as well as gathering and handling crude oil and produced water. The company's assets serve production areas including the Williston Basin in North Dakota, the Piceance and Denver-Julesburg basins in Colorado, the Permian Basin in Texas and the Barnett Shale in Texas.

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