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SEGMENT INFORMATION
6 Months Ended
Jun. 30, 2018
Segment Reporting [Abstract]  
SEGMENT INFORMATION

4. SEGMENT INFORMATION

As of June 30, 2018, our reportable segments are:

 

the Utica Shale, which is served by Summit Utica;

 

Ohio Gathering, which includes our ownership interest in OGC and OCC;

 

the Williston Basin, which is served by Polar and Divide, Tioga Midstream and Bison Midstream;

 

the Piceance/DJ Basins, which is served by Grand River and Niobrara G&P;

 

the Barnett Shale, which is served by DFW Midstream; and

 

the Marcellus Shale, which is served by Mountaineer Midstream.

Each of our reportable segments provides midstream services in a specific geographic area. Our reportable segments reflect the way in which we internally report the financial information used to make decisions and allocate resources in connection with our operations.

The Ohio Gathering reportable segment includes our investment in OGC and OCC (see Note 8). Income or loss from equity method investees, as reflected on the statements of operations, solely relates to Ohio Gathering and is recognized and disclosed on a one-month lag (see Note 8). No other line items in the statements of operations or cash flows, as disclosed in the tables below, include results for our investment in Ohio Gathering.

Corporate and Other represents those results that are: (i) not specifically attributable to a reportable segment; (ii) not individually reportable; or (iii) not allocated to our reportable segments for the purpose of evaluating their performance, including certain general and administrative expense items, natural gas and crude oil marketing services, and transaction costs.

Assets by reportable segment follow.

 

 

June 30, 2018

 

 

December 31, 2017

 

 

 

(In thousands)

 

Assets:

 

 

 

 

 

 

 

 

Utica Shale

 

$

212,326

 

 

$

212,311

 

Ohio Gathering

 

 

670,827

 

 

 

690,485

 

Williston Basin

 

 

520,799

 

 

 

512,860

 

Piceance/DJ Basins

 

 

828,999

 

 

 

798,722

 

Barnett Shale

 

 

376,969

 

 

 

383,306

 

Marcellus Shale

 

 

213,366

 

 

 

217,362

 

Total reportable segment assets

 

 

2,823,286

 

 

 

2,815,046

 

Corporate and Other

 

 

143,450

 

 

 

79,996

 

Eliminations

 

 

(1,158

)

 

 

(249

)

Total assets

 

$

2,965,578

 

 

$

2,894,793

 

Revenues by reportable segment follow.

 

 

Three months ended June 30,

 

 

Six months ended June 30,

 

 

 

2018

 

 

2017

 

 

2018

 

 

2017

 

 

 

(In thousands)

 

Revenues (1):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Utica Shale

 

$

10,422

 

 

$

10,456

 

 

$

20,463

 

 

$

19,252

 

Williston Basin

 

 

33,416

 

 

 

29,114

 

 

 

61,840

 

 

 

95,999

 

Piceance/DJ Basins

 

 

42,992

 

 

 

33,763

 

 

 

84,579

 

 

 

68,571

 

Barnett Shale

 

 

16,155

 

 

 

20,904

 

 

 

32,325

 

 

 

38,646

 

Marcellus Shale

 

 

8,050

 

 

 

7,365

 

 

 

15,875

 

 

 

14,269

 

Total reportable segments revenue

 

 

111,035

 

 

 

101,602

 

 

 

215,082

 

 

 

236,737

 

Corporate and Other

 

 

19,422

 

 

 

1,362

 

 

 

33,598

 

 

 

3,148

 

Eliminations

 

 

(2,274

)

 

 

(1,172

)

 

 

(3,177

)

 

 

(2,288

)

Total revenues

 

$

128,183

 

 

$

101,792

 

 

$

245,503

 

 

$

237,597

 

 

(1) Excludes revenues earned by Ohio Gathering due to equity method accounting.

Counterparties accounting for more than 10% of total revenues were as follows:

 

 

Three months ended June 30,

 

 

Six months ended June 30,

 

 

 

2018

 

 

2017

 

 

2018

 

 

2017

 

Percentage of total revenues (1)(2):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Counterparty A - Piceance/DJ Basins

 

 

10

%

 

*

 

 

 

11

%

 

*

 

Counterparty B - Piceance/DJ Basins

 

*

 

 

 

10

%

 

*

 

 

*

 

Counterparty C - Barnett Shale

 

 

11

%

 

 

11

%

 

*

 

 

*

 

Counterparty D - Utica Shale

 

*

 

 

 

10

%

 

*

 

 

*

 

Counterparty E - Williston Basin

 

*

 

 

*

 

 

*

 

 

 

21

%

 

(1) Includes recognition of revenue that was previously deferred in connection with minimum volume commitments.

(2) Excludes revenues earned by Ohio Gathering due to equity method accounting.

* Less than 10%

Depreciation and amortization, including the amortization expense associated with our favorable and unfavorable gas gathering contracts as reported in other revenues, by reportable segment follows.

 

 

Three months ended June 30,

 

 

Six months ended June 30,

 

 

 

2018

 

 

2017

 

 

2018

 

 

2017

 

 

 

(In thousands)

 

Depreciation and amortization (1):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Utica Shale

 

$

2,033

 

 

$

1,748

 

 

$

3,886

 

 

$

3,395

 

Williston Basin

 

 

5,622

 

 

 

8,385

 

 

 

11,231

 

 

 

16,766

 

Piceance/DJ Basins

 

 

12,450

 

 

 

12,225

 

 

 

25,005

 

 

 

24,436

 

Barnett Shale (2)

 

 

3,759

 

 

 

3,762

 

 

 

7,516

 

 

 

7,524

 

Marcellus Shale

 

 

2,274

 

 

 

2,263

 

 

 

4,546

 

 

 

4,526

 

Total reportable segment depreciation and amortization

 

 

26,138

 

 

 

28,383

 

 

 

52,184

 

 

 

56,647

 

Corporate and Other

 

 

496

 

 

 

154

 

 

 

976

 

 

 

308

 

Total depreciation and amortization

 

$

26,634

 

 

$

28,537

 

 

$

53,160

 

 

$

56,955

 

 

(1) Excludes depreciation and amortization recognized by Ohio Gathering due to equity method accounting.

(2) Includes the amortization expense associated with our favorable and unfavorable gas gathering contracts as reported in other revenues.

Cash paid for capital expenditures by reportable segment follow.

 

 

 

Six months ended June 30,

 

 

 

2018

 

 

2017

 

 

 

(In thousands)

 

Cash paid for capital expenditures (1):

 

 

 

 

 

 

 

 

Utica Shale

 

$

1,846

 

 

$

16,473

 

Williston Basin

 

 

10,966

 

 

 

11,085

 

Piceance/DJ Basins

 

 

24,827

 

 

 

11,934

 

Barnett Shale

 

 

349

 

 

 

(399

)

Marcellus Shale

 

 

545

 

 

 

407

 

Total reportable segment capital expenditures

 

 

38,533

 

 

 

39,500

 

Corporate and Other

 

 

51,861

 

 

 

6,412

 

Total cash paid for capital expenditures

 

$

90,394

 

 

$

45,912

 

 

(1) Excludes cash paid for capital expenditures by Ohio Gathering due to equity method accounting.

During the six months ended June 30, 2018, Corporate included cash paid of $1.0 million for corporate purposes; the remainder represents capital expenditures for Summit Permian.

We assess the performance of our reportable segments based on segment adjusted EBITDA. We define segment adjusted EBITDA as total revenues less total costs and expenses; plus (i) other income excluding interest income, (ii) our proportional adjusted EBITDA for equity method investees (as defined below), (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) change in the Deferred Purchase Price Obligation fair value, (viii) early extinguishment of debt expense, (ix) impairments and (x) other noncash expenses or losses, less other noncash income or gains. We define proportional adjusted EBITDA for our equity method investees as the product of (i) total revenues less total expenses, excluding impairments and other noncash income or expense items and (ii) amortization for deferred contract costs; multiplied by our ownership interest in Ohio Gathering during the respective period.

For the purpose of evaluating segment performance, we exclude the effect of Corporate and Other revenues and expenses, such as certain general and administrative expenses (including compensation-related expenses and professional services fees), natural gas and crude oil marketing services, transaction costs, interest expense, change

in the Deferred Purchase Price Obligation fair value, early extinguishment of debt expense and income tax expense or benefit from segment adjusted EBITDA.

Segment adjusted EBITDA by reportable segment follows.

 

 

Three months ended June 30,

 

 

Six months ended June 30,

 

 

 

2018

 

 

2017

 

 

2018

 

 

2017

 

 

 

(In thousands)

 

Reportable segment adjusted EBITDA

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Utica Shale

 

$

9,223

 

 

$

9,533

 

 

$

17,938

 

 

$

17,445

 

Ohio Gathering

 

 

8,935

 

 

 

9,606

 

 

 

19,412

 

 

 

18,679

 

Williston Basin

 

 

19,030

 

 

 

17,155

 

 

 

35,000

 

 

 

34,964

 

Piceance/DJ Basins

 

 

27,673

 

 

 

27,274

 

 

 

56,908

 

 

 

56,248

 

Barnett Shale

 

 

11,093

 

 

 

12,998

 

 

 

20,952

 

 

 

25,086

 

Marcellus Shale

 

 

6,543

 

 

 

5,446

 

 

 

13,219

 

 

 

11,093

 

Total of reportable segments' measures of profit

 

$

82,497

 

 

$

82,012

 

 

$

163,429

 

 

$

163,515

 

A reconciliation of income or loss before income taxes and income or loss from equity method investees to total of reportable segments' measures of profit or loss follows.

 

 

Three months ended June 30,

 

 

Six months ended June 30,

 

 

 

2018

 

 

2017

 

 

2018

 

 

2017

 

 

 

(In thousands)

 

Reconciliation of (loss) income before income taxes

    and loss from equity method investees to total of

    reportable segments' measures of profit:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(Loss) income before income taxes and

    loss from equity method investees

 

$

(45,699

)

 

$

14,420

 

 

$

(51,101

)

 

$

14,945

 

Add:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Corporate and Other

 

 

9,002

 

 

 

9,435

 

 

 

19,625

 

 

 

19,528

 

Interest expense

 

 

14,837

 

 

 

17,553

 

 

 

29,959

 

 

 

34,269

 

Early extinguishment of debt

 

 

 

 

 

 

 

 

 

 

 

22,020

 

Deferred Purchase Price Obligation

 

 

69,305

 

 

 

(5,058

)

 

 

90,963

 

 

 

15,825

 

Depreciation and amortization

 

 

26,634

 

 

 

28,537

 

 

 

53,160

 

 

 

56,955

 

Proportional adjusted EBITDA for equity method

   investees

 

 

8,935

 

 

 

9,606

 

 

 

19,412

 

 

 

18,679

 

Adjustments related to MVC shortfall payments

 

 

(3,542

)

 

 

5,578

 

 

 

(3,542

)

 

 

(23,062

)

Adjustments related to capital reimbursement activity

 

 

115

 

 

 

 

 

 

155

 

 

 

 

Unit-based and noncash compensation

 

 

2,261

 

 

 

1,871

 

 

 

4,223

 

 

 

3,999

 

Loss (gain) on asset sales, net

 

 

62

 

 

 

67

 

 

 

(12

)

 

 

70

 

Long-lived asset impairment

 

 

587

 

 

 

3

 

 

 

587

 

 

 

287

 

Total of reportable segments' measures of profit

 

$

82,497

 

 

$

82,012

 

 

$

163,429

 

 

$

163,515

 

 

For the three and six months ended June 30, 2017, we included adjustments related to MVC shortfall payments in our calculation of segment adjusted EBITDA to account for (i) the net increases or decreases in deferred revenue for MVC shortfall payments and (ii) our inclusion of expected annual or multi-year MVC shortfall payments. With respect to the impact of a net change in deferred revenue for MVC shortfall payments, we treated increases in deferred revenue balances as a favorable adjustment to segment adjusted EBITDA, while decreases in deferred revenue balances were treated as an unfavorable adjustment to segment adjusted EBITDA. We also included a proportional amount of any historical and expected MVC shortfall payments in each quarter prior to the quarter in which we actually recognized the shortfall payment. 

 

For the three and six months ended June 30, 2018, in accordance with Topic 606, adjustments related to MVC shortfall payments are recognized in gathering services and related fees (see Note 3).  

In accordance with Topic 606, contributions in aid of construction are recognized over the remaining term of the respective contract. We include adjustments related to capital reimbursement activity in our calculation of segment adjusted EBITDA to account for revenue recognized from contributions in aid of construction.

Adjustments related to MVC shortfall payments by reportable segment follow.

 

 

Three months ended June 30, 2018

 

 

 

Williston Basin

 

 

Piceance/DJ

Basins

 

 

Barnett

Shale

 

 

Total

 

 

 

(In thousands)

 

Adjustments related to MVC shortfall payments:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net change in deferred revenue for MVC shortfall

    payments

 

$

 

 

$

 

 

$

 

 

$

 

Expected MVC shortfall adjustments

 

 

(3,386

)

 

 

(93

)

 

 

(63

)

 

 

(3,542

)

Total adjustments related to MVC shortfall payments

 

$

(3,386

)

 

$

(93

)

 

$

(63

)

 

$

(3,542

)

 

 

 

Three months ended June 30, 2017

 

 

 

Williston Basin

 

 

Piceance/DJ

Basins

 

 

Barnett

Shale

 

 

Total

 

 

 

(In thousands)

 

Adjustments related to MVC shortfall payments:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net change in deferred revenue for MVC shortfall

    payments

 

$

 

 

$

(1,186

)

 

$

 

 

$

(1,186

)

Expected MVC shortfall adjustments

 

 

1,982

 

 

 

6,522

 

 

 

(1,740

)

 

 

6,764

 

Total adjustments related to MVC shortfall payments

 

$

1,982

 

 

$

5,336

 

 

$

(1,740

)

 

$

5,578

 

 

 

 

Six months ended June 30, 2018

 

 

 

Williston Basin

 

 

Piceance/DJ

Basins

 

 

Barnett

Shale

 

 

Total

 

 

 

(In thousands)

 

Adjustments related to MVC shortfall payments:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net change in deferred revenue for MVC shortfall

    payments

 

$

 

 

$

 

 

$

 

 

$

 

Expected MVC shortfall adjustments

 

 

(3,386

)

 

 

(93

)

 

 

(63

)

 

 

(3,542

)

Total adjustments related to MVC shortfall payments

 

$

(3,386

)

 

$

(93

)

 

$

(63

)

 

$

(3,542

)

 

 

 

Six months ended June 30, 2017

 

 

 

Williston Basin

 

 

Piceance/DJ

Basins

 

 

Barnett

Shale

 

 

Total

 

 

 

(In thousands)

 

Adjustments related to MVC shortfall payments:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net change in deferred revenue for MVC shortfall

   payments

 

$

(37,693

)

 

$

(1,978

)

 

$

 

 

$

(39,671

)

Expected MVC shortfall adjustments

 

 

3,964

 

 

 

13,067

 

 

 

(422

)

 

 

16,609

 

Total adjustments related to MVC shortfall payments

 

$

(33,729

)

 

$

11,089

 

 

$

(422

)

 

$

(23,062

)