Attached files

file filename
8-K - CURRENT REPORT OF MATERIAL EVENTS OR CORPORATE CHANGES - Summit Midstream Partners, LPa13-14380_18k.htm
EX-99.3 - EX-99.3 - Summit Midstream Partners, LPa13-14380_1ex99d3.htm
EX-99.4 - EX-99.4 - Summit Midstream Partners, LPa13-14380_1ex99d4.htm
EX-23.1 - EX-23.1 - Summit Midstream Partners, LPa13-14380_1ex23d1.htm
EX-10.2 - EX-10.2 - Summit Midstream Partners, LPa13-14380_1ex10d2.htm
EX-99.1 - EX-99.1 - Summit Midstream Partners, LPa13-14380_1ex99d1.htm
EX-99.2 - EX-99.2 - Summit Midstream Partners, LPa13-14380_1ex99d2.htm
EX-10.3 - EX-10.3 - Summit Midstream Partners, LPa13-14380_1ex10d3.htm
EX-10.1 - EX-10.1 - Summit Midstream Partners, LPa13-14380_1ex10d1.htm

Exhibit 99.5

 

SUMMIT MIDSTREAM PARTNERS, LP

UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION

AS OF MARCH 31, 2013 AND FOR THE THREE MONTHS ENDED MARCH 31, 2013 AND

THE YEAR ENDED DECEMBER 31, 2012

 

Throughout this report, when we use the terms “we,” “us,” “SMLP,” or “the Partnership” we are referring to Summit Midstream Partners, LP, the partnership itself or to Summit Midstream Partners, LP and its subsidiaries collectively as the context requires.

 

Set forth below are our unaudited pro forma condensed combined financial statements as of and for the three months ended March 31, 2013 and for the year ended December 31, 2012 which reflect SMLP’s acquisition of the Bison Gas Gathering System from Summit Midstream Partners, LLC (“Summit Investments”) on June 4, 2013 (the “Bison Acquisition”) and our issuance of $300.0 million of new senior unsecured notes (the “Offering”).

 

The Bison Gas Gathering System was carved out from Summit Investments’ recent acquisition of Bear Tracker Energy, LLC (“BTE”) which closed on February 15, 2013.  Summit Investments accounted for its acquisition of BTE using the acquisition method of accounting.

 

The proceeds from the Offering are intended to repay borrowings under our revolving credit facility.

 

The unaudited pro forma condensed combined balance sheet as of March 31, 2013 and the unaudited pro forma condensed combined statement of operations for the three months ended March 31, 2013 were derived from the unaudited condensed consolidated financial statements of SMLP for the three months ended March 31, 2013 and the unaudited condensed financial statements of the Bison Gas Gathering System for the periods from January 1, 2013 through February 15, 2013 and February 16, 2013 through March 31, 2013.  The unaudited pro forma condensed combined statement of operations for the year ended December 31, 2012 was derived from the SMLP audited consolidated financial statements and the audited carve-out financial statements of the Bison Gas Gathering System for the year ended December 31, 2012. The pro forma financial statements do not include any historical or pro forma impacts of our pending acquisition of the Mountaineer Midstream System.

 

The unaudited pro forma condensed combined balance sheet reflects the Bison Acquisition and the Offering as if such transactions closed as of March 31, 2013 and the unaudited pro forma condensed combined statements of operations reflect the Bison Acquisition and the Offering as if such transactions had occurred as of January 1, 2012. Descriptions of the adjustments for the Bison Acquisition are presented in the notes to the unaudited pro forma condensed combined financial statements. The unaudited pro forma condensed combined financial statements and accompanying notes should be read in conjunction with SMLP’s historical financial statements filed with the Securities and Exchange Commission and included elsewhere in this offering memorandum.

 

The unaudited pro forma condensed combined balance sheet and the unaudited pro forma condensed combined statements of operations were derived by adjusting the historical financial statements of each entity based on currently available information and, therefore, the actual adjustments may materially differ from the pro forma adjustments. Because the Bison Acquisition was executed between entities under common control, the Bison Acquisition will be accounted for by SMLP on an “as if pooled” basis for all periods in which common control existed.  Common control began on February 15, 2013 concurrent with Summit Investments’ acquisition of BTE.  The assets acquired and liabilities assumed by SMLP in the Bison Acquisition have been reflected at historical cost.

 

The unaudited pro forma condensed combined financial statements do not purport to present our financial position or the results of operations had the Bison Acquisition actually been completed as of the dates indicated. Further, these unaudited pro forma condensed combined financial statements do not reflect the effects of any cost savings or other synergies that may be achieved as a result of this transaction, are based on assumptions that SMLP believes are reasonable under the circumstances, and are intended for informational purposes only.  Moreover, the statements do not project our financial position or results of operations for any future date or period.

 



 

SUMMIT MIDSTREAM PARTNERS, LP

UNAUDITED PRO FORMA CONDENSED COMBINED BALANCE SHEET

MARCH 31, 2013

 

 

 

Historical

 

 

 

 

 

 

 

 

 

Summit
Midstream
Partners, LP

 

Bison Gas
Gathering
System

 

Bison
Acquisition
pro forma
adjustments

 

Offering
pro forma
adjustments

 

Summit
Midstream
Partners, LP
pro forma

 

 

 

(In thousands)

 

Assets

 

 

 

 

 

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

 

 

 

 

 

Cash and cash equivalents (o)

 

$

2,817

 

$

 

$

(200,000

)(a)

$

294,000

(d)

$

(3,183

)

 

 

 

 

 

 

200,000

(b)

(300,000

)(d)

 

 

Accounts receivable

 

34,317

 

5,777

 

 

 

40,094

 

Receivable from affiliate

 

2,712

 

 

 

 

2,712

 

Other assets

 

1,616

 

259

 

 

 

1,875

 

Total current assets

 

41,462

 

6,036

 

 

(6,000

)

41,498

 

Property, plant and equipment, net

 

691,718

 

86,770

 

 

 

778,488

 

Intangible assets, net

 

282,448

 

163,180

 

 

 

445,628

 

Goodwill

 

45,478

 

54,197

 

 

 

99,675

 

Other noncurrent assets

 

5,736

 

2,506

 

 

6,000

(d)

14,242

 

Total assets

 

$

1,066,842

 

$

312,689

 

$

 

$

 

$

1,379,531

 

 

 

 

 

 

 

 

 

 

 

 

 

Liabilities and Partners’ Capital and Owner’s Net Investment

 

 

 

 

 

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

 

 

 

 

 

Trade accounts payable

 

$

14,149

 

$

2,935

 

$

 

$

 

$

17,084

 

Other current liabilities

 

5,863

 

3,493

 

850

(a)

 

10,206

 

Total current liabilities

 

20,012

 

6,428

 

850

 

 

27,290

 

Revolving credit facility

 

214,230

 

 

200,000

(b)(c)

(300,000

)(d)

114,230

 

Senior notes

 

 

 

 

300,000

(d)

300,000

 

Other noncurrent liabilities

 

20,958

 

2,784

 

 

 

23,742

 

Total liabilities

 

255,200

 

9,212

 

200,850

 

 

465,262

 

Commitments and contingencies

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Common limited partner capital

 

415,302

 

 

47,936

(a)

 

490,855

 

 

 

 

 

 

 

28,054

(c)

 

 

 

 

 

 

 

 

 

 

(437

)(a)

 

 

 

 

Subordinated limited partner capital

 

376,276

 

 

25,418

(c)

 

401,298

 

 

 

 

 

 

 

(396

)(a)

 

 

 

 

General partner interests

 

20,064

 

 

978

(a)

 

22,116

 

 

 

 

 

 

 

1,091

(c)

 

 

 

 

 

 

 

 

 

 

(17)

(a)

 

 

 

 

Owner’s net investment

 

 

303,477

 

(303,477

)(c)

 

 

Total partners’ capital and owner’s net investment

 

811,642

 

303,477

 

(200,850

)

 

914,269

 

Total liabilities and partners’ capital and owner’s net investment

 

$

1,066,842

 

$

312,689

 

$

 

$

 

$

1,379,531

 

 

The accompanying notes are an integral part of these unaudited pro forma condensed combined financial statements.

 



 

SUMMIT MIDSTREAM PARTNERS, LP

UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS

THREE MONTHS ENDED MARCH 31, 2013

 

 

 

Historical

 

 

 

 

 

 

 

Summit
Midstream
Partners, LP

 

Bison Gas
Gathering
System for
the period
February 16,
2013 to
March 31,
2013
(Successor)

 

Bison Gas
Gathering
System for the
period January
1, 2013 to
February 15,
2013
(Predecessor)

 

Pro forma
adjustments

 

Summit
Midstream
Partners, LP
pro forma

 

 

 

(In thousands, except per-unit and unit amounts)

 

Revenues:

 

 

 

 

 

 

 

 

 

 

 

Gathering services and other fees

 

$

38,069

 

$

 

$

 

$

 

$

38,069

 

Natural gas, NGL and condensate sales and other

 

5,806

 

7,531

 

8,029

 

 

21,366

 

Amortization of favorable and unfavorable contracts

 

(280

)

 

 

 

(280

)

Total revenues

 

43,595

 

7,531

 

8,029

 

 

59,155

 

 

 

 

 

 

 

 

 

 

 

 

 

Costs and expenses:

 

 

 

 

 

 

 

 

 

 

 

Operation and maintenance

 

14,004

 

469

 

687

 

 

15,160

 

Cost of natural gas and NGL

 

 

2,227

 

2,598

 

 

4,825

 

Transportation costs

 

 

2,259

 

2,107

 

 

4,366

 

General and administrative

 

5,056

 

126

 

169

 

 

5,351

 

Transaction costs

 

8

 

 

 

 

8

 

Depreciation and amortization

 

9,987

 

1,863

 

606

 

3,426

(e)

15,882

 

Total costs and expenses

 

29,055

 

6,944

 

6,167

 

3,426

 

45,592

 

Other income

 

1

 

 

 

 

1

 

Interest expense

 

(1,880

)

 

 

615

(f)

(6,328

)

 

 

 

 

 

 

 

 

(4,875

)(g)

 

 

 

 

 

 

 

 

 

 

(188

)(n)

 

 

Income before income taxes

 

12,661

 

587

 

1,862

 

(7,874

)

7,236

 

Income tax expense

 

(181

)

 

 

 

(181

)

Net income

 

$

12,480

 

$

587

 

$

1,862

 

$

(7,874

)

$

7,055

 

Less: net income attributable to general partner

 

250

 

12

 

37

 

(157

)

141

 

Net income attributable to limited partners

 

$

12,230

 

$

575

 

$

1,825

 

$

(7,717

)

$

6,914

 

 

 

 

 

 

 

 

 

 

 

 

 

Earnings per common unit – basic

 

$

0.25

 

 

 

 

 

 

 

$

0.14

 

Earnings per common unit – diluted

 

$

0.25

 

 

 

 

 

 

 

$

0.14

 

Earnings per subordinated unit – basic and diluted

 

$

0.25

 

 

 

 

 

 

 

$

0.14

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted-average common units outstanding – basic

 

24,412,427

 

 

 

 

 

 

 

25,966,276

(h)

Weighted-average common units outstanding – diluted

 

24,455,603

 

 

 

 

 

 

 

26,009,452

(i)

Weighted-average subordinated units outstanding – basic and diluted

 

24,409,850

 

 

 

 

 

 

 

24,409,850

 

 

The accompanying notes are an integral part of these unaudited pro forma condensed combined financial statements.

 



 

SUMMIT MIDSTREAM PARTNERS, LP

UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS

YEAR ENDED DECEMBER 31, 2012

 

 

 

Historical

 

 

 

 

 

 

 

Summit
Midstream
Partners, LP

 

Bison Gas
Gathering
System

 

Pro forma
adjustments

 

Summit
Midstream
Partners, LP
pro forma

 

 

 

(In thousands, except per-unit and unit amounts)

 

Revenues:

 

 

 

 

 

 

 

 

 

Gathering services and other fees

 

$

149,371

 

$

 

$

 

$

149,371

 

Natural gas, NGL and condensate sales and other

 

16,320

 

37,594

 

 

53,914

 

Amortization of favorable and unfavorable contracts

 

(192

)

 

 

(192

)

Total revenues

 

165,499

 

37,594

 

 

203,093

 

 

 

 

 

 

 

 

 

 

 

Costs and expenses:

 

 

 

 

 

 

 

 

 

Operation and maintenance

 

51,658

 

2,540

 

 

54,198

 

Cost of natural gas and NGL

 

 

9,091

 

 

9,091

 

Transportation costs

 

 

9,954

 

 

9,954

 

General and administrative

 

21,357

 

1,553

 

 

22,910

 

Transaction costs

 

2,020

 

 

 

2,020

 

Depreciation and amortization

 

35,299

 

2,762

 

12,627

(j)

50,688

 

Total costs and expenses

 

110,334

 

25,900

 

12,627

 

148,861

 

Other income

 

9

 

 

 

9

 

Interest expense

 

(7,340

)

 

2,283

(k)

(25,307

)

 

 

 

 

 

 

(19,500

)(l)

 

 

 

 

 

 

 

 

(750

)(n)

 

 

Affiliated interest expense

 

(5,426

)

 

 

(5,426

)

Income before income taxes

 

42,408

 

11,694

 

(30,594

)

23,508

 

Income tax expense

 

(682

)

 

 

(682

)

Net income

 

$

41,726

 

$

11,694

 

$

(30,594

)

$

22,826

 

Less: net income attributable to the pre-IPO period

 

24,112

 

8,771

 

(22,946

)

9,937

 

Net income attributable to the post-IPO period

 

17,614

 

2,923

 

(7,648

)

12,889

 

Less: net income attributable to general partner

 

352

 

58

 

(153

)

258

 

Net income attributable to limited partners

 

$

17,262

 

$

2,865

 

$

(7,495

)

$

12,631

 

 

 

 

 

 

 

 

 

 

 

Earnings per common unit – basic

 

$

0.35

 

 

 

 

 

$

0.24

 

Earnings per common unit – diluted

 

$

0.35

 

 

 

 

 

$

0.24

 

Earnings per subordinated unit – basic and diluted

 

$

0.35

 

 

 

 

 

$

0.26

 

 

 

 

 

 

 

 

 

 

 

Weighted-average common units outstanding – basic

 

24,412,427

 

 

 

 

 

25,966,276

(h)

Weighted-average common units outstanding – diluted

 

24,543,985

 

 

 

 

 

26,097,834

(m)

Weighted-average subordinated units outstanding – basic and diluted

 

24,409,850

 

 

 

 

 

24,409,850

 

 

The accompanying notes are an integral part of these unaudited pro forma condensed combined financial statements.

 



 

SUMMIT MIDSTREAM PARTNERS, LP

NOTES TO UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION

AS OF MARCH 31, 2013 AND FOR THE THREE MONTHS ENDED MARCH 31, 2013 AND

THE YEAR ENDED DECEMBER 31, 2012

 

Pro forma adjustments

 

(a)  Reflects the total purchase price for Summit Midstream Partners, LP’s acquisition of 100% of the membership interests of Bison Midstream, LLC of $249.8 million, calculated as follows (in thousands):

 

Aggregate cash purchase price to Summit Investments

 

$

200,000

 

Issuance of 1,553,849 SMLP common units to Summit Investments (1)

 

47,936

 

Issuance of 31,711 SMLP general partner units to Summit Investments (1)

 

978

 

Direct acquisition costs

 

850

 

Total Bison Acquisition purchase price

 

$

249,764

 

 


(1) Number of units calculated using the five-day volume-weighted-average price as of June 3, 2013 of $31.53 per unit.

 

On February 15, 2013, Summit Investments acquired BTE (the “BTE Transaction”) and on June 4, 2013, SMLP entered into a purchase and sale agreement with Summit Investments to acquire certain associated natural gas gathering pipeline, dehydration and compression assets in the Williston Basin in North Dakota (the “Bison Gas Gathering System”) that were part of the BTE assets acquired in February 2013 (the “Bison Transaction”). The Bison Gas Gathering System was carved out from BTE.

 

Summit Investments accounted for the BTE Transaction under the acquisition method of accounting, whereby the various gathering systems’ identifiable tangible and intangible assets acquired and liabilities assumed were recorded based on their fair values as of February 15, 2013. The intangible assets that were acquired are composed of gas gathering agreement contract values and right-of-way easements. Their fair values were determined based upon assumptions related to future cash flows, discount rates, asset lives, and projected capital expenditures to complete the various systems.

 

Purchase price assigned to Bison Gas Gathering System

 

 

 

$

303,168

 

Current assets

 

$

5,707

 

 

 

Property, plant, and equipment

 

85,477

 

 

 

Intangible assets

 

164,502

 

 

 

Other noncurrent assets

 

2,187

 

 

 

Total assets acquired

 

257,873

 

 

 

Current liabilities

 

6,112

 

 

 

Other noncurrent liabilities

 

2,790

 

 

 

Total liabilities assumed

 

$

8,902

 

 

 

Net identifiable assets acquired

 

 

 

248,971

 

Goodwill

 

 

 

$

54,197

 

 

SMLP acquired Bison at historical cost which is representative of Summit Investments recent fair value accounting for the BTE Transaction. The previous information is included because such basis adjustment will have a continuing effect on SMLP’s financial position and results of operations.

 

(b)  Reflects borrowings of $200.0 million under our revolving credit facility to partially fund the Bison Acquisition.

 



 

(c)  Reflects partner’s capital contribution by Summit Investments for the contribution of assets in excess of consideration paid by SMLP for Bison (in thousands):

 

Owner’s net investment in Bison

 

 

 

$

303,477

 

Borrowings under revolving credit facility

 

$

200,000

 

 

 

SMLP common units issued to Summit Investments

 

47,936

 

 

 

SMLP general partner interests issued to general partner

 

978

 

 

 

Total consideration

 

 

 

248,914

 

Summit Investments contribution of net assets in excess of consideration

 

 

 

$

54,563

 

Allocation of contribution:

 

 

 

 

 

General partner interest

 

$

1,091

 

 

 

Common limited partner interest (52%)

 

28,054

 

 

 

Subordinated limited partner interest (48%)

 

25,418

 

 

 

Partners’ capital allocation

 

 

 

$

54,563

 

 

The general partner interest allocation was calculated based on a 2% general partner interest in the contribution of assets in excess of consideration given by SMLP to Summit Investments.  Common and subordinated limited partner interests allocations were calculated as their respective percentages of total limited partner capital as of March 31, 2013 applied to the balance of the contribution by Summit Investments after giving effect to the general partner allocation.

 

(d)  Reflects the issuance of $300.0 million of senior notes, net of related transaction costs and expenses, of which the net proceeds were used to pay down our revolving credit facility.

 

(e)  Reflects pro forma adjustment of depreciation and amortization expense for the three months ended March 31, 2013 as follows (in thousands):

 

Eliminate historical expense

 

$

(606

)

Pro forma amortization of intangible assets

 

3,177

 

Pro forma depreciation expense

 

855

 

Pro forma adjustment to depreciation and amortization expense

 

$

3,426

 

 

Depreciation is calculated on a straight-line basis for depreciable assets.  The estimated aggregate annual amortization of intangible assets expected to be recognized as of March 31, 2013 for the remainder of 2013 and each of the four succeeding fiscal years follows (in thousands).

 

 

 

Amortization

 

2013

 

$

11,252

 

2014

 

14,063

 

2015

 

13,789

 

2016

 

12,537

 

2017

 

11,729

 

 

(f)  Reflects a $100.0 million net reduction in principal and as a result, interest expense at 2.96% (i.e. the historical average rate for borrowings under our revolving credit facility during the three months ended March 31, 2013) and assumes that the interest expense impact of the reduced outstanding balance is partially offset by an increase in commitment fee expense (0.50%) for the same principal amount.

 

(g)  Reflects interest expense for the three months ended March 31, 2013 (assumed at 6.5% annually) associated with the Offering.  Assuming a 1/8% increase (decrease) in interest rates, interest expense would increase (decrease) by approximately $93,750.

 



 

(h)  The Company’s pro forma basic weighted-average number of common units outstanding for the three months ended March 31, 2013 and the year ended December 31, 2012 was calculated as follows:

 

Basic weighted-average number of SMLP common units outstanding—as reported

 

24,412,427

 

Adjustment for SMLP common units issued to finance the Bison Acquisition

 

1,553,849

 

Pro forma basic weighted-average number of SMLP common units outstanding

 

25,966.276

 

 

(i)  The Company’s pro forma diluted weighted-average number of common units outstanding for the three months ended March 31, 2013 was calculated as follows:

 

Diluted weighted-average number of SMLP common units outstanding—as reported

 

24,455,603

 

Adjustment for SMLP common units issued to finance the Bison Acquisition

 

1,553,849

 

Pro forma diluted weighted-average number of SMLP common units outstanding

 

26,009,452

 

 

(j)  Reflects pro forma adjustment of depreciation and amortization expense for contract intangibles. Depreciation is calculated on a straight-line basis for depreciable assets.  The estimated aggregate annual amortization of intangible assets expected to be recognized as of December 31, 2012 for each of the five succeeding fiscal years follows (in thousands).

 

 

 

Amortization

 

2013

 

$

12,809

 

2014

 

14,063

 

2015

 

13,789

 

2016

 

12,537

 

2017

 

11,729

 

 

(k)  Reflects a $100.0 million net reduction in principal and as a result, interest expense at 2.78% (i.e. the historical average rate for borrowings under our revolving credit facility during the year ended December 31, 2012) and assumes that the interest expense impact of the reduced outstanding balance is partially offset by an increase in commitment fee expense (0.50%) for the same principal amount.

 

(l)  Reflects interest expense for the year ended December 31, 2012 (assumed at 6.5% annually) associated with the Offering. Assuming a 1/8% increase (decrease) in interest rates, interest expense would increase (decrease) by approximately $375,000.

 

(m)  The Company’s pro forma diluted weighted-average number of common units outstanding for the year ended December 31, 2012 was calculated as follows:

 

Diluted weighted-average number of SMLP common units outstanding—as reported

 

24,543,985

 

Adjustment for SMLP common units issued to finance the Bison Acquisition

 

1,553,849

 

Pro forma diluted weighted-average number of SMLP common units outstanding

 

26,097,834

 

 

(n)  Reflects amortization of deferred loan costs incurred in connection with the Offering.

 

(o)  Negative cash remaining after the effects of the Bison Acquisition and the Offering would be off-set with the cash flow from operations and amount drawn on our revolving credit facility in May 2013 that is not reflected herein. SMLP’s cash on hand as of May 31, 2013 was approximately $11.2 million.