Summit Midstream Corp. (SMC) Earnings

Management highlights

### Overall Financial Performance - Q2 2026 adjusted EBITDA hit $60.7 million, a 12% increase compared to Q1 2026, with growth across both the Rockies and MidCon segments. - Q2 2026 distributable cash flow was $36.8 million, and free cash flow was $9.4 million. Total capital expenditures for the quarter were $25 million, including $4.1 million in maintenance capex. - End-of-quarter balance sheet: $21 million in unrestricted cash, $418 million in available borrowing capacity, and total leverage of 4.1x. The company has started executing its 35 million share repurchase program, with 35,000 shares repurchased for $1 million in Q2, leaving $34 million in remaining capacity. ### Operational Activity and Commercial Progress - 36 wells were turned in line during Q2 (16 in DJ Basin, 20 in MidCon), with an additional 17 wells brought online in the Williston Basin immediately after quarter close. There are approximately 75 drilled but uncompleted wells across the company's footprint. - Rockies activity: Total rig count increased from 5 to 8 quarter-over-quarter, with 6 rigs active in the Williston Basin. Two new gathering agreements secured in Divide County in H1 2026, bringing visibility to 30 additional new well connections not included in original 2026 guidance, mostly weighted to Q4 2026. A 20-year gathering and processing agreement extension was signed with an anchor DJ Basin customer. - Permian (EE) segment: Total contracted volume on the EE pipeline reached just over 1.9 Bcf per day via new firm transportation agreements. The mainline compression expansion open season has been extended through the end of August to finalize additional contracts, with a final investment decision expected before the open season concludes. The company is securing a $50 million uncommitted accordion from its financial partner to fund the project. - MidCon segment: Newly connected wells in the emerging ARCOMA dry gas region are performing in line or above expectations, with slower initial production declines than projected, representing a potential growth catalyst for 2027 and beyond. All previously shut-in production resumed by the end of July. ### Strategic Priorities - The company is targeting long-term organic adjusted EBITDA growth of over $100 million by 2030, driven primarily by the Rockies and Permian segments. Current near-term focus is on completing the EE compression expansion project and supporting accelerated customer development via the WellConnect program in the Rockies. - The company is working toward a 3.5x leverage target and aims to resume a common share dividend in the near future.

Guidance

• Full year 2026 adjusted EBITDA guidance was tightened to a range of $235 million to $255 million, with the midpoint holding steady at $245 million. Management currently expects results to land at or above the midpoint, with upside potential beyond the upper end of the range driven by ongoing commodity strength and continued activity acceleration. Downside risk is limited, and would only occur in the event of a dramatic commodity price drop or material well underperformance. • Full year 2026 capital expenditure guidance was raised to $100 million to $120 million, including contributions to the EE joint venture. The increase is driven by the 30 new unplanned Williston wells and incremental capital for the EE project tied to new firm transportation agreements. All incremental capex is tied to contracted or committed activity and expected to generate high returns, with earnings contributions starting in 2027.

Segment performance

1. Rockies Segment: Generated adjusted EBITDA of $30.4 million, a $4 million increase from Q1 2026. This growth was driven by a 6.3% increase in liquids volume throughput (averaging 68,000 barrels per day) and 30% higher quarter-over-quarter realized crude oil and NGL prices, partially offset by a 3% decline in natural gas volume throughput (averaging 162 million cubic feet per day). It contributed 50.1% of total Q2 2026 adjusted EBITDA. 2. Permian Segment: Reported adjusted EBITDA of $9.4 million, a $0.6 million increase from Q1 2026, driven by a 6.7% increase in EE volume throughput (averaging 859 million cubic feet per day). It contributed 15.5% of total Q2 2026 adjusted EBITDA. 3. Peon Segment: Reported adjusted EBITDA of $8.7 million, a $0.9 million decrease from Q1 2026, primarily due to a 5.7% decline in volume throughput from temporary production shut-ins and no new well connections during the quarter. All shut-in production had resumed by the end of July. It contributed 14.3% of total Q2 2026 adjusted EBITDA. 4. MidCon Segment: Reported adjusted EBITDA of $21.4 million, a $2 million increase from Q1 2026, driven by a 9.9% increase in natural gas volume throughput to 523 million cubic feet per day from 20 new well connections. It contributed 35.3% of total Q2 2026 adjusted EBITDA. Total company Q2 2026 adjusted EBITDA was $60.7 million.

Risks & headwinds

• Commodity price volatility: Lower crude oil or natural gas prices could lead to reduced customer drilling activity, lower volumes, and lower earnings from percentage-of-proceeds contracts, which could push full year 2026 results below guidance. • Peon Segment uncertainty: MBC shortfall payments will expire at the end of Q3 2026, leading to an expected $4 million to $4.5 million step-down in quarterly segment EBITDA starting in Q4 2026. Long-term segment growth depends on increased regional natural gas demand (from data center build-out or Canadian LNG) to offset oversupply from Canadian associated gas, which is not currently included in the company's long-term forecast. • M&A market conditions: Valuations for bolt-on acquisition opportunities in the Rockies have become frothy, increasing the risk of overpaying for assets, and the company is maintaining discipline on deal pricing. • Well performance risk: Unexpected underperformance of newly connected wells could negatively impact volumetric growth and earnings.

Analyst Q&A

• Q: What incremental adjusted EBITDA will 30 new Williston wells add in 2027, and what is the broader growth outlook for the basin?

  A: The 30 wells are expected to contribute approximately $10 million in EBITDA in 2027, with most coming online in late Q4 2026 to early Q1 2027. The company secured 240,000 acres of new dedications in H1 2026, and if crude prices hold at current levels, additional rigs and more drilling activity are likely, with upside potential for more customer additions beyond the 30 planned wells.

• Q: What commercial commitments are still needed for EE compression expansion FID, and what EBITDA will the project generate?

  A: Finalization of two outstanding commercial agreements will meet the FID requirement, expected in the next few weeks. The base FID case delivers a sub-6x build multiple, with the multiple falling below 3x once all remaining capacity is contracted. Base FID case EBITDA will fall between the $70 million current contract level and the $90+ million fully contracted level outlined in investor materials, with full commercialization expected by the end of 2026.

• Q: What is Peon Segment normalized EBITDA after MBC shortfall payments expire, and what is the long-term outlook?

  A: A $4 million to $4.5 million quarterly step-down in EBITDA is expected starting Q4 2026, putting the normalized run rate around $4 million to $4.5 million per quarter. No Peon development is included in the company's $100 million long-term growth target through 2030, a conservative forecast: there is upside if regional natural gas demand rises from data center development or Canadian LNG projects to offset current oversupply.

• Q: What is the priority order for free cash flow allocation, and when will the 3.5x leverage target be hit?

  A: The priority order is: debt reduction to hit the leverage target first, followed by organic growth investment, then reinstating the common dividend, with share repurchases only used to support liquidity during market downturns. Management expects to reach the 3.5x leverage target in 12 to 18 months, between the second half of 2027 and the first half of 2028. Non-EE organic capex will remain around $50 million annually, leaving free cash flow to pay down debt.