Why Summit Midstream Partners Shares Are Shooting Higher Today?

Summit Midstream Partners LP SMLP shares are trading higher by around 14% after the company disclosed its external advisors are evaluating strategic alternatives for the Partnership to maximize its unitholder value, including continued execution of the business plan and asset sale, among others.

SMLP also revealed the receipt of interest from third parties for potential transactions‎, ranging from the sale of specific assets to consideration for the whole Partnership.

The company also provided an operational update. The company expects Q3 adjusted EBITDA of $70 million, up 20% Q/Q, and reaffirmed guidance for Q4 adjusted EBITDA at $75 million-$85 million.

The company sees significant Q3 volume growth in almost every segment, with around 20% growth in the Northeast segment and about 20% in the Rockies segment.

In particular, SMLP sees total average daily throughput volume growth of 11% Q/Q to about 1,345 MMcf/d, with OGC natural gas throughput increase of 11% Q/Q to 870 MMcf/d and Double E Pipeline gross volumes increase of 34% Q/Q to 325 MMcf/d.

The company connected 74 wells in Q3, leading to 224 wells connected year-to-date, and says it is on track to achieve the target of 300 wells by FY23-end.

"After a slower than expected start to the first half of the year, primarily driven by low commodity prices and well completion timing delays, we have reestablished significant positive momentum with robust growth in quarterly Adjusted EBITDA, natural gas and liquids volume and well interconnects. And while we are optimistic about our outlook, which includes significant free cash flow generation and debt reduction, we also believe that our current unit price does not reflect the true value of the Partnership and that the best way to maximize unitholder value is to explore our options, while remaining focused on the Partnership's operational performance and execution of its business strategy," said Heath Deneke, President, Chief Executive Officer, and Chairman.

The company will release Q3 FY23 results on November 3, 2023.

Price Action: SMLP shares are up 13.99% at $15.56 on the last check Tuesday.