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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-Q
(Mark One)
xQUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2023
or
o
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from        to        
Commission file number: 001-35666
Summit Midstream Partners, LP
(Exact name of registrant as specified in its charter)
Delaware
(State or other jurisdiction of
incorporation or organization)
910 Louisiana StreetSuite 4200
HoustonTX
(Address of principal executive offices)
45-5200503
(I.R.S. Employer
Identification No.)

77002
(Zip Code)
(832413-4770
(Registrant’s telephone number, including area code)
Not applicable
(Former name, former address and former fiscal year, if changed since last report)
Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading Symbol(s)Name of each exchange on which registered
Common UnitsSMLPNew York Stock Exchange
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. x    Yes      o    No
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
xYesoNo
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and "emerging growth company" in Rule 12b-2 of the Exchange Act.
Large accelerated filer Accelerated filerx
Non-accelerated filer Smaller reporting companyx
Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Acto
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). ☐ Yes   x No
Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.
ClassAs of October 31, 2023
Common Units10,376,189 units


TABLE OF CONTENTS

1

COMMONLY USED OR DEFINED TERMS
2015 Blacktail Releasea 2015 rupture of our four-inch produced water gathering pipeline near Williston, North Dakota
2022 DJ Acquisitionsthe acquisition of Outrigger DJ Midstream LLC from Outrigger Energy II LLC, and each of Sterling Energy Investments LLC, Grasslands Energy Marketing LLC and Centennial Water Pipelines LLC from Sterling Investment Holdings LLC
2025 Senior Notes
Summit Holdings' and Finance Corp.’s 5.75% senior unsecured notes due April 2025

2026 Secured NotesSummit Holdings' and Finance Corp.’s 8.500% senior secured second lien notes due 2026
2026 Secured Notes Indenture
Indenture, dated as of November 2, 2021, by and among Summit Holdings, Finance Corp., the guarantors party thereto and Regions Bank, as trustee

ABL Facility
the asset-based lending credit facility governed by the ABL Agreement

ABL Agreement
Loan and Security Agreement, dated as of November 2, 2021, among Summit Holdings, as borrower, SMLP and certain subsidiaries from time to time party thereto, as guarantors, Bank of America, N.A., as agent, ING Capital LLC, Royal Bank of Canada and Regions Bank, as co-syndication agents, and Bank of America, N.A., ING Capital LLC, RBC Capital Markets and Regions Capital Markets, as joint lead arrangers and joint bookrunners


ASUAccounting Standards Update
Bcf/done billion cubic feet per day
Bison MidstreamBison Midstream, LLC
Board of Directorsthe board of directors of our General Partner
condensate
a natural gas liquid with a low vapor pressure, mainly composed of propane, butane,
pentane and heavier hydrocarbon fractions

Co-IssuersSummit Holdings and Finance Corp.
DFW MidstreamDFW Midstream Services LLC
DJ BasinDenver-Julesburg Basin
Double EDouble E Pipeline, LLC
Double E Pipelinea 135 mile, 1.35 Bcf/d, FERC-regulated interstate natural gas transmission pipeline that commenced operations in November 2021 and provides transportation service from receipt points in the Delaware Basin to various delivery points in and around the Waha hub in Texas
Double E Projectthe development and construction of the Double E Pipeline
EPA
Environmental Protection Agency
2

EPUearnings or loss per unit
FASBFinancial Accounting Standards Board
Finance Corp.Summit Midstream Finance Corp.
frackingthe process of injecting liquid at high pressure into subterranean rocks, boreholes, etc. so as to force open existing fissures and extract oil or gas
frac-protect activitiesactivities that are designed to protect existing hydrocarbon wells from harm by shutting in existing hydrocarbon production until new well activities have concluded
GAAPaccounting principles generally accepted in the United States of America
General PartnerSummit Midstream GP, LLC
GPgeneral partner
Grand RiverGrand River Gathering, LLC
Guarantor SubsidiariesGrand River and its subsidiaries, DFW Midstream, Summit Marketing, Summit Permian, Permian Finance, OpCo, Summit Utica, Meadowlark Midstream, Summit Permian II, Mountaineer Midstream, Epping, Red Rock, Polar Midstream and Summit Niobrara
Hubgeographic location of a storage facility and multiple pipeline interconnections
LIBORLondon Interbank Offered Rate
Mbbl/done thousand barrels per day
MD&A
Management's Discussion and Analysis of Financial Condition and Results of Operations
Meadowlark MidstreamMeadowlark Midstream Company, LLC
MMBTUmetric million British thermal units
MMcf/done million cubic feet per day
Mountaineer MidstreamMountaineer Midstream Company, LLC
MVCminimum volume commitment
NGLs
natural gas liquids; the combination of ethane, propane, normal butane, iso-butane and natural gasolines that when removed from unprocessed natural gas streams become liquid under various levels of higher pressure and lower temperature

NYSENew York Stock Exchange
Ohio GatheringOhio Gathering Company, L.L.C. and Ohio Condensate Company, L.L.C.
OpCoSummit Midstream OpCo, LP
3

playa proven geological formation that contains commercial amounts of hydrocarbons
Permian FinanceSummit Midstream Permian Finance, LLC
Permian HoldcoSummit Permian Transmission Holdco, LLC
Permian Term Loan Facility
the term loan governed by the Credit Agreement, dated as of March 8, 2021, among Summit Permian Transmission, LLC, as borrower, MUFG Bank Ltd., as administrative agent, Mizuho Bank (USA), as collateral agent, ING Capital LLC, Mizuho Bank, Ltd. and MUFG Union Bank, N.A., as L/C issuers, coordinating lead arrangers and joint bookrunners, and the lenders from time to time party thereto

Permian Transmission Credit Facilities
the credit facilities governed by the Credit Agreement, dated as of March 8, 2021, among Summit Permian Transmission, LLC, as borrower, MUFG Bank Ltd., as administrative agent, Mizuho Bank (USA), as collateral agent, ING Capital LLC, Mizuho Bank, Ltd. and MUFG Union Bank, N.A., as L/C issuers, coordinating lead arrangers and joint bookrunners, and the lenders from time to time party thereto

produced water
   water from underground geologic formations that is a by-product of natural gas and crude oil production

Red Rock GatheringRed Rock Gathering Company, LLC
Revolving Credit Facility
   the Third Amended and Restated Credit Agreement dated as of May 26, 2017, as amended by the First Amendment to Third Amended and Restated Credit Agreement dated as of September 22, 2017, the Second Amendment to Third Amended and Restated Credit Agreement dated as of June 26, 2019, the Third Amendment to Third Amended and Restated Credit Agreement dated as of December 24, 2019 and the Fourth Amendment to Third Amended and Restated Credit Agreement dated as of December 18, 2020

SECSecurities and Exchange Commission
Securities ActSecurities Act of 1933, as amended
segment adjusted EBITDA
   total revenues less total costs and expenses; plus (i) other income excluding interest income, (ii) our proportional adjusted EBITDA for equity method investees, (iii) depreciation and amortization, (iv) adjustments related to MVC shortfall payments, (v) adjustments related to capital reimbursement activity, (vi) unit-based and noncash compensation, (vii) impairments and (viii) other noncash expenses or losses, less other noncash income or gains

Senior NotesThe 2025 Senior Notes and the 2026 Secured Notes, collectively
Series A Preferred UnitsSeries A Fixed-to-Floating Rate Cumulative Redeemable Perpetual Preferred Units
shortfall payment
   the payment received from a counterparty when its volume throughput does not meet its MVC for the applicable period

SMLPSummit Midstream Partners, LP
SMLP LTIPSMLP Long-Term Incentive Plan
SMP HoldingsSummit Midstream Partners Holdings, LLC, also known as SMPH
4

SOFR
Secured Overnight Financing Rate

Subsidiary Series A Preferred Units
Series A Fixed Rate Cumulative Redeemable Preferred Units issued by Permian Holdco
Summit HoldingsSummit Midstream Holdings, LLC
Summit InvestmentsSummit Midstream Partners, LLC
Summit MarketingSummit Midstream Marketing, LLC
Summit NiobraraSummit Midstream Niobrara, LLC
Summit PermianSummit Midstream Permian, LLC
Summit Permian IISummit Midstream Permian II, LLC
Summit Permian Transmission
Summit Permian Transmission, LLC
Summit UticaSummit Midstream Utica, LLC
the PartnershipSummit Midstream Partners, LP and its subsidiaries
the Partnership Agreement
   the Fourth Amended and Restated Agreement of Limited Partnership of the Partnership dated May 28, 2020, as amended

throughput volume
   the volume of natural gas, crude oil or produced water gathered, transported or passing through a pipeline, plant or other facility during a particular period; also referred to as volume throughput

unconventional resource basin
   a basin where natural gas or crude oil production is developed from unconventional sources that require hydraulic fracturing as part of the completion process, for instance, natural gas produced from shale formations and coalbeds; also referred to as an unconventional resource play

wellhead
   the equipment at the surface of a well, used to control the well's pressure; also, the point at which the hydrocarbons and water exit the ground


5

PART I - FINANCIAL INFORMATION
Item 1. Financial Statements.

SUMMIT MIDSTREAM PARTNERS, LP AND SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
September 30,
2023
December 31,
2022
(In thousands, except unit amounts)
ASSETS
Cash and cash equivalents$17,097 $11,808 
Restricted cash1,798 1,723 
Accounts receivable78,915 75,287 
Other current assets3,159 8,724 
Total current assets100,969 97,542 
Property, plant and equipment, net1,695,459 1,718,754 
Intangible assets, net182,195 198,718 
Investment in equity method investees491,747 506,677 
Other noncurrent assets39,144 38,273 
TOTAL ASSETS$2,509,514 $2,559,964 
LIABILITIES AND CAPITAL
Trade accounts payable$15,496 $14,052 
Accrued expenses31,542 20,601 
Deferred revenue11,262 9,054 
Ad valorem taxes payable7,969 10,245 
Accrued compensation and employee benefits5,269 16,319 
Accrued interest39,468 17,355 
Accrued environmental remediation1,365 1,365 
Accrued settlement payable6,659 6,667 
Current portion of long-term debt14,258 10,507 
Other current liabilities9,313 11,724 
Total current liabilities142,601 117,889 
Long-term debt, net of issuance costs1,440,832 1,479,855 
Noncurrent deferred revenue31,280 37,694 
Noncurrent accrued environmental remediation1,701 2,340 
Other noncurrent liabilities34,546 38,784 
TOTAL LIABILITIES1,650,960 1,676,562 
Commitments and contingencies (Note 14)
Mezzanine Capital
Subsidiary Series A Preferred Units (93,039 units issued and outstanding at September 30, 2023 and December 31, 2022)
122,564 118,584 
Partners' Capital
Series A Preferred Units (65,508 units issued and outstanding at September 30, 2023 and December 31, 2022)
93,769 85,327 
Common limited partner capital (10,376,189 and 10,182,763 units issued and outstanding at September 30, 2023 and December 31, 2022, respectively)
642,221 679,491 
Total partners' capital
735,990 764,818 
TOTAL LIABILITIES AND CAPITAL
$2,509,514 $2,559,964 
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
6

SUMMIT MIDSTREAM PARTNERS, LP AND SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
Three Months Ended
September 30,
Nine Months Ended
September 30,
2023202220232022
(In thousands, except per-unit amounts)
Revenues:
Gathering services and related fees$66,035 $61,814 $180,492 $187,465 
Natural gas, NGLs and condensate sales45,120 16,628 130,365 67,364 
Other revenues10,038 10,240 20,728 29,042 
Total revenues
121,193 88,682 331,585 283,871 
Costs and expenses:
Cost of natural gas and NGLs27,110 15,080 77,967 64,162 
Operation and maintenance26,161 21,877 75,291 61,216 
General and administrative11,098 8,550 31,897 31,983 
Depreciation and amortization30,778 28,841 90,734 89,397 
Transaction costs144 1,517 926 1,750 
Acquisition integration costs171  2,396  
Gain on asset sales, net(40)(99)(183)(409)
Long-lived asset impairments 7,016 455 91,644 
Total costs and expenses
95,422 82,782 279,483 339,743 
Other income (expense), net(315) 747 (4)
Gain on interest rate swaps2,856 5,527 4,851 16,491 
Loss on sale of business(9)(85)(45)(85)
Interest expense(34,568)(24,932)(103,966)(73,982)
Loss before income taxes and equity method investment income(6,265)(13,590)(46,311)(113,452)
Income tax benefit (expense)(72)68 180 (307)
Income from equity method investees10,211 5,734 22,302 14,162 
Net income (loss)$3,874 $(7,788)$(23,829)$(99,597)
Less: Net income attributable to Subsidiary Series A Preferred Units(3,623)(3,278)(8,865)(12,155)
Net income (loss) attributable to Summit Midstream Partners, LP$251 $(11,066)$(32,694)$(111,752)
Less: net income attributable to Series A Preferred Units(3,004)(1,962)(8,442)(6,070)
Add: deemed contribution from 2022 Preferred Exchange Offer   20,974 
Net loss attributable to common limited partners$(2,753)$(13,028)$(41,136)$(96,848)
Net loss per limited partner unit:
Common unit – basic
$(0.27)$(1.28)$(3.99)$(9.68)
Common unit – diluted
$(0.27)$(1.28)$(3.99)$(9.68)
Weighted-average limited partner units outstanding:
Common units – basic
10,376 10,168 10,320 10,003 
Common units – diluted
10,376 10,168 10,320 10,003 
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
7

SUMMIT MIDSTREAM PARTNERS, LP AND SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF PARTNERS' CAPITAL
Partners' Capital
Series A Preferred UnitsCommon Limited Partners CapitalTotal
(In thousands)
Partners' capital, December 31, 2022$85,327 $679,491 $764,818 
Net income (loss)2,639 (18,548)(15,909)
Unit-based compensation 1,929 1,929 
Tax withholdings and associated payments on vested SMLP LTIP awards
 (1,136)(1,136)
Partners' capital, March 31, 2023$87,966 $661,736 $749,702 
Net income (loss)2,799 (19,835)(17,036)
Unit-based compensation 1,833 1,833 
Tax withholdings and associated payments on vested SMLP LTIP awards
 (148)(148)
Partners' capital, June 30, 2023$90,765 $643,586 $734,351 
Net income (loss)3,004 (2,753)251 
Unit-based compensation 1,396 1,396 
Tax withholdings and associated payments on vested SMLP LTIP awards
 (8)(8)
Partners' capital, September 30, 2023$93,769 $642,221 $735,990 


Partners' Capital
Series A Preferred UnitsCommon Limited Partners CapitalTotal
(In thousands)
Partners' capital, December 31, 2021$169,769 $734,594 $904,363 
Net income (loss)2,220 (7,938)(5,718)
Unit-based compensation 1,690 1,690 
Tax withholdings and associated payments on vested SMLP LTIP awards
 (562)(562)
Tax withholdings on 2022 Preferred Exchange Offer (2,652)(2,652)
Effect of 2022 Preferred Exchange Offer, inclusive of a $20.9 million deemed contribution to common unit holders (Note 10)
(92,587)92,587  
Partners' capital, March 31, 2022$79,402 $817,719 $897,121 
Net income (loss)1,888 (96,856)(94,968)
Unit-based compensation 582 582 
Tax withholdings and associated payments on vested SMLP LTIP awards
 (327)(327)
Partners' capital, June 30, 2022$81,290 $721,118 $802,408 
Net income (loss)1,962 (13,028)(11,066)
Unit-based compensation 692 692 
Tax withholdings and associated payments on vested SMLP LTIP awards
 (213)(213)
Partners' capital, September 30, 2022$83,252 $708,569 $791,821 
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
8

SUMMIT MIDSTREAM PARTNERS, LP AND SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
Nine Months Ended September 30,
20232022
(In thousands)
Cash flows from operating activities:
Net loss $(23,829)$(99,597)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation and amortization91,438 90,101 
Noncash lease expense3,804 675 
Amortization of debt issuance costs9,493 6,642 
Unit-based and noncash compensation5,158 2,964 
Income from equity method investees(22,302)(14,162)
Distributions from equity method investees40,732 31,764 
Gain on asset sales, net(183)(409)
Foreign currency gain(83) 
Loss on earn-out420  
Loss on sale of business45 85 
Unrealized gain on interest rate swaps(1,074)(16,870)
Long-lived asset impairment455 91,644 
Changes in operating assets and liabilities:
Accounts receivable(3,765)(1,323)
Trade accounts payable1,525 4,284 
Accrued expenses6,718 (2,040)
Deferred revenue, net(4,206)(4,861)
Ad valorem taxes payable(2,277)(1,769)
Accrued interest22,113 21,448 
Accrued environmental remediation, net(639)(1,730)
Other, net(12,784)(10,041)
Net cash provided by operating activities110,759 96,805 
Cash flows from investing activities:
Capital expenditures(49,863)(20,955)
Proceeds from sale of Lane G&P System, net of cash sold in transaction 75,520 
Proceeds from sale of Bison Midstream, net of cash sold in transaction 36,671 
Proceeds from asset sale128 4,646 
Investment in Double E equity method investee(3,500)(8,444)
Other, net(2,611) 
Net cash provided by (used in) investing activities(55,846)87,438 
Cash flows from financing activities:
Repayments on Permian Transmission Term Loan(7,804)(3,442)
Repayments on ABL Facility(70,000)(205,000)
Borrowings on ABL Facility35,000 23,000 
Distributions on Subsidiary Series A Preferred Units(4,884)(1,628)
Debt issuance costs(247) 
Other, net(1,614)(2,781)
Net cash used in financing activities(49,549)(189,851)
Net change in cash, cash equivalents and restricted cash5,364 (5,608)
Cash, cash equivalents and restricted cash, beginning of period13,531 19,572 
Cash, cash equivalents and restricted cash, end of period$18,895 $13,964 
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
9

SUMMIT MIDSTREAM PARTNERS, LP AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
1. ORGANIZATION, BUSINESS OPERATIONS AND PRESENTATION AND CONSOLIDATION
Organization. Summit Midstream Partners, LP (including its subsidiaries, collectively “SMLP” or the “Partnership”) is a Delaware limited partnership that was formed in May 2012 and began operations in October 2012. SMLP is a value-oriented limited partnership focused on developing, owning and operating midstream energy infrastructure assets that are strategically located in unconventional resource basins, primarily shale formations, in the continental United States. The Partnership’s business activities are primarily conducted through various operating subsidiaries, each of which is owned or controlled by its wholly owned subsidiary holding company, Summit Holdings, a Delaware limited liability company.
Business Operations. The Partnership provides natural gas gathering, compression, treating and processing services as well as crude oil and produced water gathering services pursuant to primarily long-term, fee-based agreements with its customers. The Partnership’s results are primarily driven by the volumes of natural gas that it gathers, compresses, treats and/or processes as well as by the volumes of crude oil and produced water that it gathers. Other than the Partnership’s investments in Double E and Ohio Gathering, all of its business activities are conducted through wholly owned operating subsidiaries.
Presentation and Consolidation. The Partnership prepares its condensed consolidated financial statements in accordance with GAAP as established by the FASB and pursuant to the rules and regulations of the SEC pertaining to interim financial information. The unaudited condensed consolidated financial statements contained in this report include all normal and recurring material adjustments that, in the opinion of management, are necessary for a fair statement of the financial position, results of operations and cash flows for the interim periods presented herein. These unaudited condensed consolidated financial statements and notes thereto should be read in conjunction with the consolidated financial statements and related notes that are included in the Partnership’s Annual Report on Form 10-K for the year ended December 31, 2022.
The Partnership makes estimates and assumptions that affect the reported amounts of assets and liabilities at the balance sheet dates, including fair value measurements, the reported amounts of revenues and expenses and the disclosure of commitments and contingencies. Although management believes these estimates are reasonable, actual results could differ from its estimates.
The unaudited condensed consolidated financial statements contained in this report include the assets, liabilities and results of operations of SMLP and its subsidiaries and all intercompany transactions among the consolidated entities have been eliminated in consolidation. Comprehensive income or loss is the same as net income or loss for all periods presented.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND RECENTLY ISSUED ACCOUNTING STANDARDS APPLICABLE TO THE PARTNERSHIP
There have been no changes to the Partnership’s significant accounting policies since December 31, 2022.
Accounting standards recently implemented.
ASU No. 2020-4 Reference Rate Reform (“ASU 2020-4”). ASU 2020-4 provides optional expedients and exceptions for applying GAAP to contracts, hedging relationships and other transactions affected by reference rate reform on financial reporting. Contract terms that are modified due to the replacement of a reference rate are not required to be remeasured or reassessed under relevant accounting standards. During the quarter ended June 30, 2023, the Partnership amended the terms of its Permian Transmission Credit Facility and Term Loan and interest rate swaps, which replaced its existing LIBOR based terms with SOFR rate terms. The amendments in ASU 2020-4 are effective as of March 12, 2020 through December 31, 2022. In December 2022, the FASB issued ASU 2022-06, which amended Topic 848 to defer the sunset date to apply the practical expedients until December 31, 2024. The impact of the change in reference rate did not have a material impact on the Partnership’s consolidated financial statements. See Note 8 - Debt, for additional information.
New accounting standards not yet implemented.
ASU No. 2020-6 Debt – Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging – Contracts in Entity’s Own Equity (Subtopic 815–40) (“ASU 2020-6”). ASU 2020-6 simplifies the accounting for certain financial instruments with characteristics of liabilities and equity, including convertible instruments and contracts on an entity’s own equity. The ASU is part of the FASB’s simplification initiative, which aims to reduce unnecessary complexity in GAAP. The ASU’s amendments are effective for fiscal years beginning after December 15, 2023, and interim periods within those fiscal years. The Partnership does not expect the provisions of ASU 2020-6 will have a material impact on its consolidated financial statements and disclosures.
10

3. ACQUISITIONS AND DIVESTITURES
Acquisition of Outrigger DJ. On December 1, 2022, the Partnership completed the acquisition of 100% of the equity interests of Outrigger DJ Midstream LLC (“Outrigger DJ”) from Outrigger Energy II LLC. The acquisition of Outrigger DJ constituted a business combination and was accounted for using the acquisition method of accounting. For tax purposes, the acquisition was accounted for as an acquisition of assets. The acquisition significantly increased the Partnership’s gas processing capacity and footprint in the DJ Basin and diversified its customer base.
No material changes were made during nine months ended September 30, 2023 to the provisional purchase accounting measurements initially recorded in December 2022 for the Outrigger DJ acquisition. The provisional measurements are subject to change during the measurement period and such changes could be material. The Partnership continues to assess the fair values of the assets acquired and liabilities assumed. Certain data and assessments necessary to complete the purchase price allocation are still under evaluation, including, but not limited to, the final actualization of accrued liabilities and receivable balances and the valuation of property, plant and equipment and intangible assets. The Partnership will finalize the purchase price allocation during the twelve-month period following the acquisition date, during which time the value of the assets and liabilities may be revised as appropriate.
Acquisition of Sterling DJ. On December 1, 2022, the Partnership completed the acquisition of 100% of the equity interests in each of Sterling Energy Investments LLC, Grasslands Energy Marketing LLC and Centennial Water Pipelines LLC (collectively, “Sterling DJ”) from Sterling Investment Holdings LLC. The acquisition of Sterling DJ constituted a business combination and was accounted for using the acquisition method of accounting. For tax purposes, the acquisition was accounted for as an acquisition of assets. The acquisition significantly increased the Partnership’s gas processing capacity and footprint in the DJ Basin and diversified its customer base.
No material changes were made during nine months ended September 30, 2023 to the provisional purchase accounting measurements initially recorded in December 2022 for the Sterling DJ acquisition. The provisional measurements are subject to change during the measurement period and such changes could be material. The Partnership continues to assess the fair values of the assets acquired and liabilities assumed. Certain data and assessments necessary to complete the purchase price allocation are still under evaluation, including, but not limited to, the final actualization of accrued liabilities and receivable balances and the valuation of property, plant and equipment and intangible assets. The Partnership will finalize the purchase price allocation during the twelve-month period following the acquisition date, during which time the value of the assets and liabilities may be revised as appropriate.
Divestiture of Lane G&P System. On June 30, 2022, the Partnership completed the sale of Summit Permian, which owns the Lane Gathering and Processing System (“Lane G&P System”), and Permian Finance to Longwood Gathering and Disposal Systems, LP (“Longwood”), a wholly owned subsidiary of Matador ͏Resources Company (“Matador”). In connection with the transaction, the Partnership released, to a subsidiary of Matador, and Matador agreed to assume, take or-pay firm capacity on the Double E Pipeline.
During the quarterly period ended June 30, 2022, the Partnership recognized an impairment of $84.5 million related to the disposition of the Lane G&P System based on total cash proceeds received of $77.5 million, including $2.0 million of cash sold in the transaction, net assets of $160.8 million, and other costs to sell of $1.2 million.
Divestiture of Bison Midstream. On September 19, 2022, the Partnership completed the sale of Bison Midstream, LLC (“Bison Midstream”), its gas gathering system in Burke and Mountrail Counties, North Dakota to a subsidiary of Steel Reef Infrastructure Corp. (“Steel Reef”), an integrated owner and operator of associated gas capture, gathering and processing assets in North Dakota and Saskatchewan.
During the quarterly period ended September 30, 2022, the Partnership recognized an impairment of $6.9 million related to the disposition of Bison Midstream based on total cash proceeds received of $36.7 million and net assets of $43.6 million. The cash proceeds were used to reduce amounts outstanding under the ABL Facility.
11

Pro Forma Information (Unaudited)
The following unaudited supplemental pro forma condensed results of operations for the three and nine months ended September 30, 2022 present consolidated information as though the acquisition of Sterling DJ and Outrigger DJ, and the divestiture of the Lane G&P System and Bison Midstream had occurred on January 1, 2021. The unaudited supplemental pro forma financial information was derived from the historical consolidated and combined statements of operations of the Partnership, Sterling DJ, and Outrigger DJ and modified to include required conforming adjustments. These unaudited supplemental pro forma results of operations are provided for illustrative purposes only and do not purport to be indicative of the actual results that would have been achieved by the combined entities for the periods presented or that may be achieved in the future. Future results may vary significantly from the results reflected in this unaudited pro forma financial information:
Three Months Ended
September 30,
Nine Months Ended
September 30,
20222022
Revenues$145,465 $394,575 
Net loss$(4,712)$(13,003)
4. REVENUE
The following table presents estimated revenue expected to be recognized during the remainder of 2023 and over the remaining contract period related to performance obligations that are unsatisfied and are comprised of estimated minimum volume commitments.
(In thousands)20232024202520262027Thereafter
Gathering services and related fees$19,180 $67,079 $46,803 $30,527 $9,038 $6,042 
Revenue by category. In the following tables, revenue is disaggregated by geographic area and major products and services. For more detailed information about reportable segments, see Note 15 – Segment Information.
Three Months Ended September 30, 2023
Gathering services and related feesNatural gas, NGLs and condensate salesOther revenuesTotal
(In thousands)
Reportable Segments:
Northeast$18,157 $ $ $18,157 
Rockies18,383 43,967 5,541 67,891 
Permian  893 893 
Piceance20,658 937 1,569 23,164 
Barnett8,837 216 2,035 11,088 
Total reportable segments66,035 45,120 10,038 121,193 
Corporate and other    
Total$66,035 $45,120 $10,038 $121,193 
12

Three Months Ended September 30, 2022
Gathering services and related feesNatural gas, NGLs and condensate salesOther revenuesTotal
(In thousands)
Reportable Segments:
Northeast$13,528 $ $ $13,528 
Rockies17,209 14,111 4,823 36,143 
Permian  891 891 
Piceance20,406 1,519 1,581 23,506 
Barnett10,671 998 2,622 14,291 
Total reportable segments61,814 16,628 9,917 88,359 
Corporate and other  323 323 
Total$61,814 $16,628 $10,240 $88,682 
Nine Months Ended September 30, 2023
Gathering services and related feesNatural gas, NGLs and condensate salesOther revenuesTotal
(In thousands)
Reportable Segments:
Northeast$43,717 $ $ $43,717 
Rockies48,595 125,871 8,885 183,351 
Permian  2,678 2,678 
Piceance59,791 3,913 4,368 68,072 
Barnett28,389 581 4,835 33,805 
Total reportable segments180,492 130,365 20,766 331,623 
Corporate and other  (38)(38)
Total$180,492 $130,365 $20,728 $331,585 
Nine Months Ended September 30, 2022
Gathering services and related feesNatural gas, NGLs and condensate salesOther revenuesTotal
(In thousands)
Reportable Segments:
Northeast$41,104 $ $ $41,104 
Rockies51,508 42,697 14,708 108,913 
Permian3,669 17,381 3,208 24,258 
Piceance60,458 5,481 4,132 70,071 
Barnett30,726 1,784 6,356 38,866 
Total reportable segments187,465 67,343 28,404 283,212 
Corporate and other 21 638 659 
Total$187,465 $67,364 $29,042 $283,871 
13

5. PROPERTY, PLANT AND EQUIPMENT
Details on the Partnership’s property, plant and equipment follow.
September 30, 2023December 31, 2022
(In thousands)
Gathering and processing systems and related equipment$2,315,041 $2,262,330 
Construction in progress49,412 59,036 
Land and line fill11,990 11,756 
Other63,976 62,222 
Total
2,440,419 2,395,344 
Less: accumulated depreciation(744,960)(676,590)
Property, plant and equipment, net
$1,695,459 $1,718,754 
Depreciation expense and capitalized interest for the Partnership follow.
Three Months Ended September 30,Nine Months Ended September 30,
2023202220232022
(In thousands)
Depreciation expense$23,926 $22,474 $70,130 $70,235 
Capitalized interest351 128 790 711 
6. EQUITY METHOD INVESTMENTS
The Partnership has equity method investments in Double E and Ohio Gathering, the balances of which are included in the Investment in equity method investees caption on the unaudited condensed consolidated balance sheets. Details of the Partnership’s equity method investments follow.
September 30, 2023December 31, 2022
(In thousands)
Double E$277,094 $281,640 
Ohio Gathering214,653 225,037 
Total$491,747 $506,677 
7. DEFERRED REVENUE
Certain of the Partnership’s gathering and/or processing agreements provide for monthly or annual MVCs. The amount of the shortfall payment is based on the difference between the actual throughput volume shipped and/or processed for the applicable period and the MVC for the applicable period, multiplied by the applicable gathering or processing fee.
Many of the Partnership’s gas gathering agreements contain provisions that can reduce or delay the cash flows that it expects to receive from MVCs to the extent that a customer's actual throughput volumes are above or below its MVC for the applicable contracted measurement period.
The balances in deferred revenue as of September 30, 2023 and December 31, 2022 are primarily related to contributions in aid of construction which will be recognized as revenue over the life of the contract.
An update of current deferred revenue follows.
Total
(In thousands)
Current deferred revenue, December 31, 2022$9,054 
Add: additions
8,940 
Less: revenue recognized and other
(6,732)
Current deferred revenue, September 30, 2023$11,262 
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An update of noncurrent deferred revenue follows.
Total
(In thousands)
Noncurrent deferred revenue, December 31, 2022$37,694 
Add: additions
2,215 
Less: reclassification to current deferred revenue and other
(8,629)
Noncurrent deferred revenue, September 30, 2023$31,280 
8. DEBT
Debt for the Partnership at September 30, 2023 and December 31, 2022, follows:
September 30, 2023December 31, 2022
(In thousands)
ABL Facility: Summit Holdings' asset based credit facility due May 1, 2026
$295,000 $330,000 
Permian Transmission Term Loan: Permian Transmission's variable rate senior
secured term loan due January 2028
147,549 155,353 
2025 Senior Notes: Summit Holdings' 5.75% senior unsecured notes due April 15, 2025
259,463 259,463 
2026 Secured Notes: Summit Holdings' and Finance Corp's 8.50% senior second lien notes due October 15, 2026
785,000 785,000 
Less: unamortized debt discount and debt issuance costs (31,922)(39,454)
Total debt1,455,090 1,490,362 
Less: current portion of Permian Transmission Credit Facility(14,258)(10,507)
Total long-term debt$1,440,832 $1,479,855 
ABL Facility. On November 2, 2021, the Partnership, the Partnership’s subsidiary, Summit Holdings, and the subsidiaries of Summit Holdings party thereto entered into a first-lien, senior secured credit facility, consisting of a $400.0 million asset-based revolving credit facility (the “ABL Facility”), subject to a borrowing base comprised of a percentage of eligible accounts receivable of Summit Holdings and its subsidiaries that guarantee the ABL Facility (collectively, the “ABL Facility Subsidiary Guarantors”) and a percentage of eligible above-ground fixed assets including eligible compression units, processing plants, compression stations and related equipment of Summit Holdings and the ABL Facility Subsidiary Guarantors. As of September 30, 2023, the most recent borrowing base determination of eligible assets totaled $715.2 million, an amount greater than the $400.0 million of aggregate commitments.
The ABL Facility will mature on May 1, 2026; provided that, (a) if the outstanding amount of the 2025 Senior Notes (or any permitted refinancing indebtedness in respect thereof that has a final maturity, scheduled amortization or any other scheduled repayment, mandatory prepayment, mandatory redemption or sinking fund obligation prior to the date that is 120 days after the Termination Date (as defined in the ABL Agreement)) on such date equals or exceeds $50.0 million, then the ABL Facility will mature on December 13, 2024 and (b) if both (i) any amount of the 2025 Senior Notes (or any permitted refinancing indebtedness in respect thereof that has a final maturity, scheduled amortization or any other scheduled repayment, mandatory prepayment, mandatory redemption or sinking fund obligation prior to the date that is 120 days after the Termination Date) is outstanding on such date and (ii) Liquidity (as defined in the ABL Agreement) is less than an amount equal to the sum of the then aggregate outstanding principal amount of the 2025 Senior Notes (or any permitted refinancing indebtedness in respect thereof that has a final maturity, scheduled amortization or any other scheduled repayment, mandatory prepayment, mandatory redemption or sinking fund obligation prior to the date that is 120 days after the Termination Date) plus the Threshold Amount (as defined in the ABL Agreement) on such date, then the ABL Facility will mature on January 14, 2025.
The Partnership is actively pursuing opportunities to refinance parts or the entirety of its capital structure, including the 2025 Senior Notes. If the outstanding amount of the 2025 Senior Notes is expected to equal or exceed $50.0 million by December 13, 2024, then the Partnership will include a December 13, 2024 maturity of the ABL Facility in its going concern assessment under FASB ASC 205-40, Going Concern, starting with the release of the 2023 annual financial statements.
As of September 30, 2023, the applicable margin under the adjusted SOFR borrowings was 3.50%, the interest rate was 8.93% and the available borrowing capacity of the ABL Facility totaled $100.7 million after giving effect to the issuance of $4.3 million in outstanding but undrawn irrevocable standby letters of credit.
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The ABL Facility requires that Summit Holdings not permit (i) the First Lien Net Leverage Ratio (as defined in the ABL Agreement) as of the last day of any fiscal quarter to be greater than 2.50:1.00, or (ii) the Interest Coverage Ratio (as defined in the ABL Agreement) as of the last day of any fiscal quarter to be less than 2.00:1.00. As of September 30, 2023, the First Lien Net Leverage Ratio was 1.16:1.00 and the Interest Coverage Ratio was 2.21:1.00 As of September 30, 2023, the Partnership was in compliance with the financial covenants of the ABL Facility.
Permian Transmission Credit Facility. On March 8, 2021, the Partnership’s unrestricted subsidiary, Permian Transmission, entered into a Credit Agreement which allows for $175.0 million of senior secured credit facilities (the “Permian Transmission Credit Facilities”), including a $160.0 million Term Loan Facility and a $15.0 million working capital facility. The Permian Transmission Credit Facilities can be used to finance Permian Transmission’s capital calls associated with its investment in Double E, debt service and other general corporate purposes. Unexpended proceeds from draws on the Permian Transmission Credit Facilities are classified as restricted cash on the accompanying unaudited condensed consolidated balance sheets.
As of September 30, 2023, the applicable margin under adjusted SOFR borrowings was 2.475%, the average interest rate was 7.69% and the unused portion of the Permian Transmission Credit Facilities totaled $4.5 million, subject to a commitment fee of 0.7% after giving effect to the issuance of $10.5 million in outstanding but undrawn irrevocable standby letters of credit. Summit Permian Transmission, LLC entered into interest rate hedges with notional amounts representing approximately 90% of the Permian Term Loan facility. As of September 30, 2023, the interest rate hedges were at a fixed SOFR rate of 1.23%. As of September 30, 2023, the Partnership was in compliance with the financial covenants of the Permian Transmission Credit Facilities.
Permian Transmission Term Loan. In accordance with the terms of the Permian Transmission Credit Facilities, in January 2022, the Permian Term Loan Facility was converted into a Term Loan (the “Permian Transmission Term Loan”). The Permian Transmission Term Loan is due January 2028. As of September 30, 2023, the applicable margin under adjusted SOFR borrowings was 2.475% and the average interest rate was 7.69%. As of September 30, 2023, the Partnership was in compliance with the financial covenants governing the Permian Transmission Term Loan.
In accordance with the terms of the Permian Transmission Term Loan, Permian Transmission is required to make mandatory principal repayments. Below is a summary of the remaining mandatory principal repayments as of September 30, 2023:
(In thousands)Total20232024202520262027Thereafter
Amortizing principal repayments$147,549 $2,703 $15,524 $16,580 $16,967 $17,769 $78,006 
2026 Secured Notes. In 2021, the Co-Issuers issued $700.0 million of 8.500% Senior Secured Second Lien Notes due 2026 to eligible purchasers pursuant to Rule 144A and Regulation S of the Securities Act, at a price of 98.5% of their face value. Additionally, in November 2022, in connection with the 2022 DJ Acquisitions, the Co-Issuers issued an additional $85.0 million of 2026 Secured Notes at a price of 99.26% of their face value. The Co-Issuers pay interest on the 2026 Secured Notes semi-annually in cash in arrears on April 15 and October 15 of each year, and will be jointly and severally guaranteed, on a senior second-priority secured basis (subject to permitted liens), by the Partnership and each restricted subsidiary of the Partnership (other than the Co-Issuers) that is an obligor under the ABL Agreement, or under the Co-Issuers’ 2025 Senior Notes on the issue date of the 2026 Secured Notes.
The 2026 Secured Notes are effectively subordinated to any of our or the guarantors’ current and future secured first lien indebtedness, including indebtedness incurred under the ABL Facility, to the extent of the value of the collateral securing such indebtedness, and our and the guarantors’ current and future debt that is secured by liens on assets other than the collateral, to the extent of the value of such assets. The 2026 Secured Notes are structurally subordinated to all indebtedness and other liabilities of our subsidiaries that do not guarantee the 2026 Secured Notes. The 2026 Secured Notes are effectively equal to our and the guarantors’ obligations under any future second lien indebtedness and effectively senior to all of our future junior lien indebtedness and existing and future unsecured indebtedness, including our outstanding senior unsecured notes, to the extent of the value of the collateral, and senior to any of our future subordinated indebtedness. The 2026 Secured Notes will mature on October 15, 2026.
Before October 15, 2023, the Co-Issuers could have redeemed the 2026 Secured Notes, in whole or in part, at a price equal to 100% of their principal amount, plus a make-whole premium, together with accrued and unpaid interest to, but not including the redemption date. On and after October 15, 2023, the Co-Issuers may redeem all or part of the 2026 Secured Notes at redemption prices (expressed as percentages of principal amount) equal to: (a) 104.250% for the twelve-month period beginning October 15, 2023; (b) 102.125% for the twelve-month period beginning October 15, 2024; and (c) 100.000% for the twelve-month period beginning on October 15, 2025 and at any time thereafter, in each case plus accrued and unpaid interest, if any, to, but not including, the redemption date. As of September 30, 2023, the Partnership was in compliance with the financial covenants governing its 2026 Secured Notes.
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Starting in the first quarter of 2023 with respect to the fiscal year ended 2022, and continuing annually through the fiscal year ended 2025, the Partnership is required under the terms of the 2026 Secured Notes Indenture to, if it has Excess Cash Flow (as defined in the 2026 Secured Notes Indenture), and subject to its ability to make such an offer under the ABL Facility, offer to purchase an amount of the 2026 Secured Notes, at 100% of the principal amount plus accrued and unpaid interest, equal to 100% of the Excess Cash Flow generated in the prior year. Excess Cash Flow is generally defined as consolidated cash flow minus the sum of capital expenditures and cash payments in respect of permitted investments and permitted restricted payments.
Generally, if the Partnership does not offer to purchase designated annual amounts of its 2026 Secured Notes or reduce its first lien capacity under the 2026 Secured Notes Indenture per annum from 2023 through 2025, the interest rate on the 2026 Secured Notes is subject to certain rate escalations. Per the terms of the 2026 Secured Notes Indenture, the designated amounts are to offer to purchase $50.0 million aggregate principal amount of the 2026 Secured Notes by April 1, 2023, otherwise the interest rate shall automatically increase by 50 basis points per annum; $100.0 million aggregate principal amount of the 2026 Secured Notes by April 1, 2024, otherwise the interest rate shall automatically increase by 100 basis points per annum (minus any amount previously increased); and $200.0 million aggregate principal amount of the 2026 Secured Notes by April 1, 2025, otherwise the interest rate shall automatically increase by 200 basis points per annum (minus any amount previously increased). Based on the amount of the Partnership’s Excess Cash Flow for the fiscal year ended 2022, the Partnership was not able to make offers to purchase in the designated amount for the fiscal year ended 2022; as a result, the interest rate on the 2026 Secured Notes increased 50 basis points to 9.00% effective with the first payment on April 1, 2023.
To the extent the Partnership makes an offer to purchase, and the offer is not fully accepted by the holders of the 2026 Secured Notes, the Partnership may use any remaining amount not accepted for any purpose not prohibited by the 2026 Secured Notes Indenture or the ABL Facility.
2025 Senior Notes. In February 2017, the Co-Issuers co-issued the 2025 Senior Notes. The Partnership pays interest on the 2025 Senior Notes semi-annually in cash in arrears on April 15 and October 15 of each year. The 2025 Senior Notes are senior, unsecured obligations and rank equally in right of payment with all of the Partnership’s existing and future senior obligations. The 2025 Senior Notes are effectively subordinated in right of payment to all of the Partnership’s secured indebtedness, to the extent of the collateral securing such indebtedness.
The Co-Issuers have the right to redeem all or part of the 2025 Senior Notes at a redemption price of 100.00%, plus accrued and unpaid interest, if any, to, but not including the redemption date.
As of September 30, 2023, the Partnership was in compliance with the financial covenants governing its 2025 Senior Notes.
9. FINANCIAL INSTRUMENTS
Fair Value. A summary of the estimated fair value of our debt financial instruments follows.
September 30, 2023December 31, 2022
Carrying
Value (1)
Estimated
fair value
(Level 2)
Carrying
Value (1)
Estimated
fair value
(Level 2)
(In thousands)
2025 Senior Notes$259,463 $242,814 $259,463 $221,733 
2026 Secured Notes785,000 754,581 785,000 750,983 
________
(1) Excludes applicable unamortized debt issuance costs and debt discounts.
The carrying values on the balance sheets of the ABL Facility and Permian Transmission Term Loan represents their fair value due to their floating interest rates. The fair values of the 2026 Secured Notes and 2025 Senior Notes are based on an average of nonbinding broker quotes as of September 30, 2023 and December 31, 2022. The use of different market assumptions or valuation methodologies may have a material effect on their estimated fair value.
Deferred earn-out. As a result of the acquisition of Sterling DJ, the Partnership assumed a deferred earn-out liability, which is remeasured each reporting period. As of September 30, 2023 and December 31, 2022, the estimated fair value of the deferred earn-out liability was $4.9 million and $5.2 million, respectively, and was estimated using a discounted cash flow technique based on estimated future fresh water deliveries and appropriate discount rates. Given the unobservable nature of the inputs, the fair value measurement of the deferred earn-out is deemed to use Level 3 inputs. The deferred earn-out sits within Centennial Water Pipelines LLC, one of the Partnership’s unrestricted subsidiaries.
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Interest Rate Swaps. In connection with the Permian Transmission Term Loan, formerly the Permian Transmission Credit Facility, the Partnership entered into amortizing interest rate swap agreements. As of September 30, 2023 and December 31, 2022, the outstanding notional amounts of interest rate swaps were $132.8 million and $139.8 million, respectively. These interest rate swaps manage exposure to variability in expected cash flows attributable to interest rate risk. Interest rate swaps convert a portion of the Partnership’s variable rate debt to fixed rate debt. The Partnership chooses counterparties for its derivative instruments that it believes are creditworthy at the time the transactions are entered into, and the Partnership actively monitors the creditworthiness where applicable. However, there can be no assurance that a counterparty will be able to meet its obligations to the Partnership. The Partnership presents its derivative positions on a gross basis and does not net the asset and liability positions. During the quarter ended June 30, 2023, the Partnership amended its interest rate swap agreements to, among other things, replace its LIBOR based terms with a SOFR rate terms.
As of September 30, 2023 and December 31, 2022, the Partnership’s interest rate swap agreements had a fair value of $16.3 million and $15.2 million, respectively, and are recorded within other noncurrent assets within the unaudited condensed consolidated balance sheets. The derivative instruments’ fair value are determined using level 2 inputs from the fair value hierarchy. For the three and nine months ended September 30, 2023, the Company recorded a gain on interest rate swaps of $2.9 million and $4.9 million, respectively.
10. PARTNERS' CAPITAL AND MEZZANINE CAPITAL
Common Units. An update of the number of issued and outstanding common limited partner units is as follows for the period from December 31, 2022 to September 30, 2023.
Common Units
Units, December 31, 202210,182,763 
Common units issued for SMLP LTIP, net
193,426 
Units, September 30, 202310,376,189 
Series A Preferred Units. As of September 30, 2023, the Partnership had 65,508 Series A Preferred Units outstanding and $29.9 million of accrued and unpaid distributions on its Series A Preferred Units.
Series A Preferred Unit Exchange Offers. In January 2022, the Partnership completed an offer to exchange its Series A Preferred Units for newly issued common units (the “2022 Preferred Exchange Offer”), whereby it issued 2,853,875 SMLP common units, net of units withheld for withholding taxes, in exchange for 77,939 Series A Preferred Units. As a result of the transaction, the Partnership recognized a deemed contribution of $20.9 million from the Series A Preferred Unit holders to the common unit holders.
Subsidiary Series A Preferred Units. The Partnership records its Subsidiary Series A Preferred Units at fair value upon issuance, net of issuance costs, and subsequently records an effective interest method accretion amount each reporting period to accrete the carrying value to a most probable redemption value that is based on a predetermined internal rate of return measure. If the Partnership elects to make payment-in-kind (“PIK”) distributions to holders of its Subsidiary Series A Preferred Units, these PIK distributions increase the liquidation preference on each Subsidiary Series A Preferred Unit. Net Income (Loss) attributable to our common units includes adjustments for PIK distributions and redemption accretion.
As of September 30, 2023, the Partnership had 93,039 Subsidiary Series A Preferred Units issued and outstanding.
If the Subsidiary Series A Preferred Units were redeemed on September 30, 2023, the redemption amount would be $123.9 million when considering the applicable multiple of invested capital metric and make-whole amount provisions contained in the Subsidiary Series A Preferred Unit agreement.
The following table shows the change in our Subsidiary Series A Preferred Unit balance from January 1, 2023 to September 30, 2023, net of $1.8 million and $2.2 million of unamortized issuance costs at September 30, 2023 and December 31, 2022, respectively:
(In thousands)
Balance at December 31, 2022$118,584 
Redemption accretion, net of issuance cost amortization
8,865 
Cash distribution (includes a $1.6 million distribution payable as of September 30, 2023)
(4,885)
Balance at September 30, 2023$122,564 
Cash Distribution Policy. The Partnership suspended its cash distributions to holders of its common units, commencing with respect to the quarter ended March 31, 2020. Upon the resumption of distributions, the Partnership Agreement requires that it distribute all available cash, subject to reserves established by its General Partner, within 45 days after the end of each quarter
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to unitholders of record on the applicable record date. The amount of distributions paid under this policy is subject to fluctuations based on the amount of cash the Partnership generates from its business and the decision to make any distribution is determined by the General Partner, taking into consideration the terms of the Partnership Agreement. There were no distributions paid during the three and nine months ended September 30, 2023 or during the twelve months ended December 31, 2022.
11. EARNINGS PER UNIT
The following table details the components of EPU.
Three Months Ended September 30,Nine Months Ended September 30,
2023202220232022
(In thousands, except per-unit amounts)
Numerator for basic and diluted EPU:
Allocation of net loss among limited partner interests:
Net income (loss)
$3,874 $(7,788)$(23,829)$(99,597)
Less: Net income attributable to Subsidiary Series A Preferred Units
(3,623)(3,278)(8,865)(12,155)
Net income (loss) attributable to Summit Midstream Partners, LP$251 $(11,066)$(32,694)(111,752)
Less: Net income attributable to Series A Preferred Units$(3,004)$(1,962)$(8,442)(6,070)
Add: Deemed capital contribution from 2022 Preferred Exchange Offer   20,974 
Net loss attributable to common limited partners$(2,753)$(13,028)$(41,136)$(96,848)
Denominator for basic and diluted EPU:
Weighted-average common units outstanding – basic10,376 10,168 10,320 10,003 
Effect of nonvested phantom units    
Weighted-average common units outstanding – diluted
10,376 10,168 10,320 10,003 
Net income per limited partner unit:
Common unit – basic
$(0.27)$(1.28)$(3.99)$(9.68)
Common unit – diluted
$(0.27)$(1.28)$(3.99)$(9.68)
Nonvested anti-dilutive phantom units excluded from the calculation of diluted EPU
160  221  
12. SUPPLEMENTAL CASH FLOW INFORMATION
Nine Months Ended September 30,
20232022
(In thousands)
Supplemental cash flow information:
Cash interest paid$72,749 $46,093 
Cash paid for taxes$15 $149 
Noncash investing and financing activities:
Capital expenditures in trade accounts payable (period-end accruals)$7,354 $4,102 
Accretion of Subsidiary Series A Preferred Units, net of issuance cost amortization$8,865 $10,554 
2022 Preferred Exchange Offer$ $92,587 
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13. UNIT-BASED AND NONCASH COMPENSATION
SMLP Long-Term Incentive Plan. The Partnership’s Long-Term Incentive Plan (“SMLP LTIP”) provides for equity awards to eligible officers, employees, consultants and directors of the Partnership, thereby linking the recipients’ compensation directly to SMLP’s performance. Significant items to note: 
For the nine-month period ended September 30, 2023, the Partnership granted 212,893 time-based phantom units and associated distribution equivalent rights to employees in connection with the Partnership’s annual incentive compensation award cycle. These awards had a grant date fair value of $16.00 per common unit and vest ratably over a 3-year period.
For the nine-month period ended September 30, 2023, the Partnership granted 110,478 performance-based phantom units and associated distribution equivalent rights to certain members of management in connection with the Partnership’s annual incentive compensation award cycle. The grant date fair value of these awards total $2.2 million.
For the nine-month period ended September 30, 2023, the Partnership issued 38,100 common units to the Partnership’s six independent directors in connection with their annual compensation plan. These awards had a grant date fair value of $16.00 per common unit and vested immediately.
As of September 30, 2023, approximately 0.5 million common units remained available for future issuance under the SMLP LTIP, which includes the impact of 0.7 million granted but unvested phantom units.
14. COMMITMENTS AND CONTINGENCIES
Environmental Matters. Although the Partnership believes that it is in material compliance with applicable environmental regulations, the risk of environmental remediation costs and liabilities are inherent in pipeline ownership and operation. Furthermore, the Partnership can provide no assurances that significant environmental remediation costs and liabilities will not be incurred in the future. The Partnership is currently not aware of any material contingent liabilities that exist with respect to environmental matters, except as noted below.
As of September 30, 2023, the Partnership has recognized (i) a current liability for remediation effort expenditures expected to be incurred within the next 12 months and (ii) a noncurrent liability for estimated remediation expenditures expected to be incurred subsequent to September 30, 2024. Each of these amounts represent the Partnership’s best estimate for costs expected to be incurred. Neither of these amounts have been discounted to their present value.
An update of the Partnership’s undiscounted accrued environmental remediation is as follows and is primarily related to the 2015 Blacktail Release and other environmental remediation activities, as detailed below.
(In thousands)
Accrued environmental remediation, December 31, 2022$3,705 
Payments made
(579)
Changes in estimates
(60)
Accrued environmental remediation, September 30, 2023$3,066 
In 2015, the Partnership learned of the rupture of a four-inch produced water gathering pipeline on the Meadowlark Midstream system near Williston, North Dakota (“2015 Blacktail Release”). On August 4, 2021, subsidiaries of the Partnership entered into the following agreements to resolve the U.S. federal and North Dakota state governments’ environmental claims with respect to the 2015 Blacktail Release: (i) a Consent Decree with the U.S. Department of Justice (“DOJ”), the U.S. Environmental Protection Agency (“EPA”), and the State of North Dakota (“Consent Decree”); (ii) a Plea Agreement with the United States (“Plea Agreement”); and (iii) a Consent Agreement with the North Dakota Industrial Commission (“Consent Agreement” together with the Consent Decree and Plea Agreement, the “Global Settlement”). As of September 30, 2023 and December 31, 2022, the accrued loss liability for the 2015 Blacktail Release were $25.5 million and $28.3 million, respectively and are recorded within Other noncurrent liabilities and Accrued settlement payable within the unaudited condensed consolidated balance sheets.
Key terms of the Global Settlement included (i) payment of penalties and fines totaling $36.3 million, consisting of $1.25 million in natural resource damages payable to federal and state governments, a $25.0 million payable to the federal government over 5 years, and a $10.0 million payable to state governments over, for the federal and state civil amounts, six years and, for the federal criminal amounts, five years, with interest applied to unpaid amounts accruing at, for the federal and state civil amounts, a fixed rate of 3.25% and, for the federal criminal amounts, a variable rate set by statute, and of which $6.7 million is expected to be paid within the next twelve months; (ii) continuation of remediation efforts at the site of the 2015 Blacktail Release; (iii) other injunctive relief including but not limited to control room management, environmental
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management system audit, training, and reporting; (iv) guilty pleas by Defendant subsidiary for (a) one charge of negligent discharge of a harmful quantity of oil and (b) one charge of knowing failure to immediately report a discharge of oil; and (v) organizational probation for a minimum period of three years from sentencing on December 6, 2021, including payment in full of certain components of the fines and penalty amounts. The agreements comprising the Global Settlement were subject to the approval of the U.S. District Court for the District of North Dakota (the “U.S. District Court”). The U.S. District Court entered an order making the civil components of the Global Settlement effective on September 28, 2021 and accepted the sentencing in the Plea Agreement on December 6, 2021, completing approval of the Global Settlement.
Subsidiaries of the Partnership are also participating in two proceedings before the EPA as a result of the Plea Agreement becoming effective. Following the U.S. District Court’s entering judgment on Defendant subsidiary’s guilty plea to one count of negligent discharge of produced water in violation of the Clean Water Act, Defendant subsidiary was statutorily debarred by operation of law pursuant to 33 U.S.C. § 1368(a) to participate in federal awards performed at the “violating facility,” which EPA determined to be the Marmon subsystem of the produced water gathering system in North Dakota. The scope and effect of the debarment as defined do not materially affect our operations. Defendant has submitted a petition for reinstatement, which was denied by the EPA’s suspension and debarment office (“SDO”) on July 11, 2022. The SDO determined that the term of probation in the Plea Agreement was the appropriate period of time to demonstrate Defendant subsidiary’s change of corporate attitude, policies, practices, and procedures. The Partnership and certain subsidiaries have also received a show cause notice from the EPA requesting us to “show cause” why SDO should not issue a Notice of Proposed Debarment to the Defendant subsidiary and certain affiliates under 2 C.F.R. § 180.800(d), to which we have responded, and in which proceeding no further developments have occurred.
Legal Proceedings. The Partnership is involved in various litigation and administrative proceedings arising in the ordinary course of business. In the opinion of management, any liabilities, which include insured claims, would not individually or in the aggregate have a material adverse effect on the Partnership's financial position or results of operations.
15. SEGMENT INFORMATION
As of September 30, 2023, the Partnership’s reportable segments are:
Rockies – Includes the Partnership’s wholly owned midstream assets located in the Williston Basin and the DJ Basin. In September 2022, the Partnership completed the sale of Bison Midstream and its gas gathering system in Burke and Mountrail Counties, North Dakota to a subsidiary of Steel Reef. Additionally, in December 2022 the Partnership completed the acquisitions of Sterling DJ and Outrigger DJ and their related midstream infrastructure. For additional information regarding these acquisitions and divestitures, see Note 3 - Acquisitions and Divestitures.
Permian – Includes the Partnership’s equity method investment in Double E and its wholly owned Lane G&P System, which was sold on June 30, 2022 to Matador. For additional information regarding the sale of the Lane G&P System, see Note 3 - Acquisitions and Divestitures.
Northeast Includes the Partnership’s wholly owned midstream assets located in the Utica and Marcellus shale plays and the equity method investment in Ohio Gathering that is focused on the Utica Shale.
Piceance – Includes the Partnership’s wholly owned midstream assets located in the Piceance Basin.
Barnett – Includes the Partnership’s wholly owned midstream assets located in the Barnett Shale.
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Corporate and Other represents those results that: (i) are not specifically attributable to a reportable segment; (ii) are not individually reportable; or (iii) have not been allocated to a reportable segment for the purpose of evaluating their performance, including certain general and administrative expense items and transaction costs.
Assets by reportable segment follow.
September 30, 2023December 31, 2022
(In thousands)
Assets:
Rockies$896,333 $886,629 
Permian295,375 298,906 
Northeast577,572 591,091 
Piceance445,302 475,719 
Barnett283,702 295,473 
Total reportable segment assets
2,498,284 2,547,818 
Corporate and Other11,230 12,146 
Total assets
$2,509,514 $2,559,964 
Segment adjusted EBITDA by reportable segment follows.
Three Months Ended September 30,Nine Months Ended September 30,
2023202220232022
(In thousands)
Reportable segment adjusted EBITDA
Rockies$24,998 $14,262 $64,986 $43,991 
Permian5,840 4,882 16,283 13,848 
Northeast27,751 19,353 65,806 57,989 
Piceance15,292 14,249 43,640 45,367 
Barnett6,084 7,864 20,380 24,397 
Total of reportable segments' measures of profit
$79,965 $60,610 $211,095 $185,592 
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A reconciliation of income or loss before income taxes and income from equity method investees to total of reportable segments' measures of profit follows.
Three Months Ended
September 30,
Nine Months Ended
September 30,
2023202220232022
(In thousands)
Reconciliation of loss before income taxes and
income from equity method investees to total of
reportable segments' measures of profit:
Loss before income taxes and income from equity method investees
$(6,265)$(13,590)$(46,311)$(113,452)
Add:
Corporate and Other expense
5,487 2,151 20,695 11,778 
Interest expense
34,568 24,932 103,966 73,982 
Depreciation and amortization (1)
31,013 29,076 91,438 90,101 
Proportional adjusted EBITDA for equity method investees
16,917 11,949 42,655 33,807 
Adjustments related to capital reimbursement activity
(3,111)(1,517)(6,778)(4,823)
Unit-based and noncash compensation
1,396 692 5,158 2,964 
Gain on asset sales, net(40)(99)(183)(409)
Long-lived asset impairment
 7,016 455 91,644 
Total of reportable segments' measures of profit
$79,965 $60,610 $211,095 $185,592 
________
(1) Includes the amortization expense associated with our favorable gas gathering contracts as reported in other revenues.
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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
This Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) is intended to inform the reader about matters affecting the financial condition and results of operations of the Partnership and its subsidiaries for the periods since December 31, 2022. As a result, the following discussion should be read in conjunction with the unaudited condensed consolidated financial statements and notes thereto included in this report and the MD&A and the audited consolidated financial statements and related notes that are included in the Partnership’s Annual Report on Form 10-K for the year ended December 31, 2022 (the “2022 Annual Report”). Among other things, those financial statements and the related notes include more detailed information regarding the basis of presentation for the following information. This discussion contains forward-looking statements that constitute our plans, estimates and beliefs. These forward-looking statements involve numerous risks and uncertainties, including, but not limited to, those discussed in Forward-Looking Statements. Actual results may differ materially from those contained in any forward-looking statements.
Overview
We are a value-driven limited partnership focused on developing, owning and operating midstream energy infrastructure assets that are strategically located in unconventional resource basins, primarily shale formations, in the continental United States.
Our financial results are driven primarily by volume throughput across our gathering systems and by expense management. We generate the majority of our revenues from the gathering, compression, treating and processing services that we provide to our customers. A majority of the volumes that we gather, compress, treat and/or process have a fixed-fee rate structure which enhances the stability of our cash flows by providing a revenue stream that is not subject to direct commodity price risk. We also earn a portion of our revenues from the following activities that directly expose us to fluctuations in commodity prices: (i) the sale of physical natural gas and/or NGLs purchased under percentage-of-proceeds or other processing arrangements with certain of our customers in the Rockies and Piceance segments, (ii) the sale of natural gas we retain from certain Barnett segment customers, (iii) the sale of condensate we retain from our gathering services in the Piceance segment and (iv) additional gathering fees that are tied to the performance of certain commodity price indexes which are then added to the fixed gathering rates.
We also have indirect exposure to changes in commodity prices such that persistently low commodity prices may cause our customers to delay and/or cancel drilling and/or completion activities or temporarily shut-in production, which would reduce the volumes of natural gas and crude oil (and associated volumes of produced water) that we gather. If certain of our customers cancel or delay drilling and/or completion activities or temporarily shut-in production, the associated MVCs, if any, ensure that we will earn a minimum amount of revenue.
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The following table presents certain consolidated and reportable segment financial data. For additional information on our reportable segments, see the "Segment Overview for the Three and Nine Months Ended September 30, 2023 and 2022" section included herein.
Three Months Ended September 30,Nine Months Ended September 30,
2023202220232022
(In thousands)
Net income (loss)$3,874 $(7,788)$(23,829)$(99,597)
Reportable segment adjusted EBITDA
Northeast
$27,751 $19,353 $65,806 $57,989 
Rockies
24,998 14,262 64,986 43,991 
Permian
5,840