By Mary de Wet
Summit Midstream Partners said lower commodity prices have caused customers to delay well completions, which is putting the Houston-based company one to two quarters behind schedule for its well connects.
On its second quarter:
“Summit’s second quarter 2023 financial and operating results were below management expectations, primarily due to temporary production shut-ins behind our Barnett system, completion delays in the Williston and Utica, and lower than expected commodity prices,” said President, Chief Executive and Chairman Heath Deneke.
“Despite these headwinds, we had a very active quarter, connecting 89 wells, including 26 in the Northeast, 4 in the Barnett, 15 in the Piceance, 38 in the DJ that we expect will reach peak production in the fourth quarter, and 6 in the Williston,” Deneke said.
“Our Northeast segment experienced 15% volume growth, driving segment adjusted EBITDA growth of $2.4 million, or 13% for the quarter. The Rockies segment fell behind quarterly expectations due to 30 wells that were delayed to the second half of the year.
“NGL prices and residue gas prices were very challenged in the second quarter, approximately 25% to 35% lower than our expectations. We believe this decline incentivized producers to delay completions a few months, shut-in approximately 25 MMcf/d of Barnett production, and directly impacted our percent-of-proceeds contracts in the DJ Basin.
“We expect the second quarter to be the low point for commodity prices, with strip NGL and natural gas prices projected to strengthen in the third and fourth quarter.”
On well connects:
“Overall, the total number of well connects we expected in 2023 remains relatively consistent at approximately 300 for the year, however, the delay in completion timing will impact calendar year results,” Deneke said.
“Subsequent to quarter-end, we connected 45 wells, including 28 in the Williston and 17 in the Utica, which will serve as a meaningful volumetric catalyst behind the Rockies and Northeast segments.
“We estimate that on average we are trending one to two quarters behind schedule.”
“While the impact of well completion timing delays to calendar year results is disappointing, customer activity levels remain strong with 195 wells turned in-line to-date, and more than 180 drilled-but-uncompleted wells (“DUCs”) and 11 rigs currently running behind our systems.”
Write to Mary de Wet at [email protected]
Read the full article here
