Bison Pro Forma Update 8-K


UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 
FORM 8-K
 
CURRENT REPORT
Pursuant to Section 13 OR 15(d)
of The Securities Exchange Act of 1934
 
Date of Report (Date of earliest event reported): September 27, 2013
 
Summit Midstream Partners, LP
(Exact name of registrant as specified in its charter)
 
Delaware
 
001-35666
 
45-5200503
(State or other jurisdiction
 
(Commission
 
(IRS Employer
of incorporation)
 
File Number)
 
Identification No.)
 
2100 McKinney Avenue
Suite 1250
Dallas, Texas 75201
(Address of principal executive offices) (Zip Code)
 
Registrants’ telephone number, including area code: (214) 242-1955
 
Not applicable.
(Former name or former address, if changed since last report)
 
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
 
o           Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
 
o           Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
 
o           Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
 
o           Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
 







Item 8.01 Other Events.
On June 5, 2013, Summit Midstream Partners, LP (the “Partnership”) filed a Current Report on Form 8-K in connection with its acquisition of certain associated natural gas gathering assets that serve exploration and production customers in the Bakken Shale Play in Mountrail and Burke counties in North Dakota (“Bison Midstream”) from a wholly owned subsidiary of Summit Midstream Partners, LLC (“Summit Investments”). Prior to the Partnership's acquisition of Bison Midstream, on February 15, 2013, Summit Investments acquired Bear Tracker Energy, and carved out the Bison Gas Gathering System in connection with its sale to the Partnership. The Partnership is filing this Current Report on Form 8-K to provide certain unaudited pro forma condensed combined financial information for the six months ended June 30, 2013 and for the year ended December 31, 2012 (filed herewith as Exhibit 99.1).
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits.
Exhibit
 Number
 
Description
99.1
 
Summit Midstream Partners, LP Unaudited Pro Forma Condensed Combined Financial Statements for the six months ended June 30, 2013 and for the year ended December 31, 2012
 

2




SIGNATURES
 
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
 
 
 
Summit Midstream Partners, LP
 
 
(Registrant)
 
 
 
 
 
By:
Summit Midstream GP, LLC (its general partner)
 
 
 
Date: September 27, 2013
 
/s/ Matthew S. Harrison
 
 
Matthew S. Harrison, Senior Vice President and Chief Financial Officer
 

 

3



EXHIBIT INDEX

Exhibit
 Number
 
Description
99.1
 
Summit Midstream Partners, LP Unaudited Pro Forma Condensed Combined Financial Statements for the six months ended June 30, 2013 and for the year ended December 31, 2012
 



 




4
Ex 99.1 Bison Pro Forma Update
EXHIBIT 99.1

SUMMIT MIDSTREAM PARTNERS, LP
UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION
FOR THE SIX MONTHS ENDED JUNE 30, 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 for the six months ended June 30, 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 Drop Down"). The Bison Gas Gathering System was carved out from Summit Investments' 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 unaudited pro forma condensed combined statement of operations for the six months ended June 30, 2013 was derived from the unaudited condensed consolidated financial statements of SMLP for the six months ended June 30, 2013 and the unaudited condensed financial statements of the Bison Gas Gathering System for the periods from January 1, 2013 through February 15, 2013. The unaudited pro forma condensed combined statement of operations for the year ended December 31, 2012 was derived from SMLP's audited consolidated financial statements for the year ended December 31, 2012 and the audited carve-out financial statements of the Bison Gas Gathering System for the year ended December 31, 2012.
The unaudited pro forma condensed combined statements of operations reflect the Bison Drop Down as if such transaction had occurred as of January 1, 2012. Descriptions of the adjustments for the Bison Drop Down 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 the historical financial statements of SMLP as filed with the Securities and Exchange Commission. The unaudited pro forma condensed combined financial statements and accompanying notes should also be read in conjunction with the historical financial statements of the Bison Gas Gathering System as filed with the Securities and Exchange Commission in SMLP's Current Report on Form 8-K dated June 5, 2013.
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 Drop Down was executed between entities under common control, SMLP accounted for the transaction on an “as if pooled” basis for all periods in which common control existed. Common control began on February 16, 2013.
The unaudited pro forma condensed combined statements of operations do not purport to present our results of operations had the Bison Drop Down actually been completed as of January 1, 2012. The unaudited pro forma condensed combined statements of operations do not purport to present our results of operations had our June 2013 issuance of $300.0 million of senior notes, a portion of which was used to repay the draw on our revolving credit facility in connection with the Bison Drop Down, been completed at an earlier date. Further, these unaudited pro forma condensed combined statements of operations do not reflect the effects of any cost savings or other synergies that may be achieved as a result of the Bison Drop Down, are based on assumptions that we believe are reasonable under the circumstances, and are intended for informational purposes only. Moreover, the statements are not intended to project our results of operations for any future period.





EXH 99.1-1

EXHIBIT 99.1

SUMMIT MIDSTREAM PARTNERS, LP
UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS
SIX MONTHS ENDED JUNE 30, 2013
 
Historical
 
 
 
 
 
 
Summit Midstream Partners, LP
 
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
$
81,130

 
$
1,824

 
$

 
$
82,954

 
Natural gas, NGL and condensate sales and other
29,811

 
6,205

 

 
36,016

 
Amortization of favorable and unfavorable contracts
(530
)
 

 

 
(530
)
 
Total revenues
110,411

 
8,029

 

 
118,440

 
 
 
 
 
 
 
 
 
 
Costs and expenses:
 
 
 
 
 
 
 
 
Operation and maintenance
29,549

 
687

 

 
30,236

 
Cost of natural gas and NGL
13,864

 
4,705

 

 
18,569

 
General and administrative
11,949

 
169

 

 
12,118

 
Transaction costs
2,426

 

 
(694
)
(a)
1,732

 
Depreciation and amortization
26,720

 
606

 
3,426

(b)
30,752

 
Total costs and expenses
84,508

 
6,167

 
2,732

 
93,407

 
Other income
2

 

 

 
2

 
Interest expense
(4,903
)
 

 
(2,029
)
(c)
(6,932
)
 
Income before income taxes
21,002

 
1,862

 
(4,761
)
 
18,103

 
Income tax expense
(402
)
 

 

 
(402
)
 
Net income
$
20,600

 
$
1,862

 
$
(4,761
)
 
$
17,701

 
Less: net income attributable to SMP Holdings
52

 

 

 
52

 
Net income attributable to partners
20,548

 
1,862

 
(4,761
)
 
17,649

 
Less: net income attributable to general partner
411

 
37

 
(95
)
 
353

 
Net income attributable to limited partners
$
20,137

 
$
1,825

 
$
(4,666
)
 
$
17,296

 
 
 
 
 
 
 
 
 
 
Earnings per common unit – basic and diluted
$
0.41

 
 
 
 
 
$
0.35

 
Earnings per subordinated unit – basic and diluted
$
0.41

 
 
 
 
 
$
0.33

 
 
 
 
 
 
 
 
 
 
Weighted-average common units outstanding – basic
24,790,158

 
 
 
 
 
26,120,802

(d)
Weighted-average common units outstanding – diluted
24,871,033

 
 
 
 
 
26,201,677

(e)
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.

EXH 99.1-2

EXHIBIT 99.1

SUMMIT MIDSTREAM PARTNERS, LP
UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS
YEAR ENDED DECEMBER 31, 2012
 
Historical
 
 
 
Summit Midstream Partners, LP pro forma
 
 
Summit Midstream Partners, LP
 
Bison Gas Gathering System
 
Pro forma adjustments
 
 
 
(In thousands, except per-unit and unit amounts)
 
Revenues:
 
 
 
 
 
 
 
 
Gathering services and other fees
$
149,371

 
$
7,089

 
$

 
$
156,460

 
Natural gas, NGL and condensate sales and other
16,320

 
30,505

 

 
46,825

 
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

 
19,045

 

 
19,045

 
General and administrative
21,357

 
1,553

 

 
22,910

 
Transaction costs
2,020

 

 

 
2,020

 
Depreciation and amortization
35,299

 
2,762

 
12,627

(f)
50,688

 
Total costs and expenses
110,334

 
25,900

 
12,627

 
148,861

 
Other income
9

 

 

 
9

 
Interest expense
(7,340
)
 

 
(4,565
)
(g)
(11,905
)
 
Affiliated interest expense
(5,426
)
 

 

 
(5,426
)
 
Income before income taxes
42,408

 
11,694

 
(17,192
)
 
36,910

 
Income tax expense
(682
)
 

 

 
(682
)
 
Net income
$
41,726

 
$
11,694

 
$
(17,192
)
 
$
36,228

 
Less: net income attributable to the pre-IPO period
24,112

 
8,771

 
(12,894
)
 
19,989

 
Net income attributable to the post-IPO period
17,614

 
2,923

 
(4,298
)
 
16,239

 
Less: net income attributable to general partner
352

 
58

 
(86
)
 
324

 
Net income attributable to limited partners
$
17,262

 
$
2,865

 
$
(4,212
)
 
$
15,915

 
 
 
 
 
 
 
 
 
 
Earnings per common unit – basic and diluted
$
0.35

 
 
 
 
 
$
0.32

 
Earnings per subordinated unit – basic and diluted
$
0.35

 
 
 
 
 
$
0.32

 
 
 
 
 
 
 
 
 
 
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

(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.


EXH 99.1-3

EXHIBIT 99.1

SUMMIT MIDSTREAM PARTNERS, LP
NOTES TO UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION
FOR THE SIX MONTHS ENDED JUNE 30, 2013 AND THE YEAR ENDED DECEMBER 31, 2012
(a) Pro forma adjustment to remove the impact of nonrecurring transaction costs associated with the Bison Drop Down.
(b) Reflects pro forma adjustment of depreciation and amortization expense for the six months ended June 30, 2013 as follows (in thousands):
Eliminate historical expense
$
(606
)
Pro forma depreciation expense
3,177

Pro forma amortization of intangible assets
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 June 30, 2013 for the remainder of 2013 and each of the four succeeding fiscal years follows (in thousands).
 
Amortization
2013
$
7,501

2014
14,063

2015
13,789

2016
12,537

2017
11,729

(c) Reflects incremental interest expense on borrowings of $200.0 million based on a rate of 2.98% for the first quarter of 2013 and 2.71% for the second quarter of 2013 (i.e. the historical average rate for borrowings under our revolving credit facility) and assumes that the interest expense impact of the additional outstanding balance is partially offset by a reduction in the 0.50% commitment fee for the same principal amount.
(d) The pro forma basic weighted-average number of common units outstanding for the six months ended June 30, 2013 was calculated as follows:
Basic weighted-average number of SMLP common units outstanding—as reported
24,790,158

Eliminate impact of adjustment for SMLP common units issued to SMP Holdings in June 2013 as consideration for Bison Midstream
(223,205
)
Adjustment for impact of SMLP common units issued to SMP Holdings as consideration for Bison Midstream as if issued January 1, 2012
1,553,849

Pro forma basic weighted-average number of SMLP common units outstanding
26,120,802

(e) The pro forma diluted weighted-average number of common units outstanding for the six months ended June 30, 2013 was calculated as follows:
Diluted weighted-average number of SMLP common units outstanding—as reported
24,871,033

Eliminate impact of adjustment for SMLP common units issued to SMP Holdings in June 2013 as consideration for Bison Midstream
(223,205
)
Adjustment for impact of SMLP common units issued to SMP Holdings as consideration for Bison Midstream as if issued January 1, 2012
1,553,849

Pro forma diluted weighted-average number of SMLP common units outstanding
26,201,677


EXH 99.1-4

EXHIBIT 99.1

(f) Reflects pro forma adjustment of depreciation and amortization expense for contract intangibles for the year ended December 31, 2012. Depreciation expense 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

(g) Reflects incremental interest expense on borrowings of $200.0 million based on a rate of 2.88% for the first quarter of 2012 and 2.75% for the second, third and fourth quarters of 2012 (i.e. the historical average rate for borrowings under our revolving credit facility) and assumes that the interest expense impact of the additional outstanding balance is partially offset by a reduction in the 0.50% commitment fee for the same principal amount.
(h) The pro forma basic weighted-average number of common units outstanding for 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 impact of SMLP common units issued to SMP Holdings as consideration for Bison Midstream as if issued January 1, 2012
1,553,849

Pro forma basic weighted-average number of SMLP common units outstanding
25,966,276

(i) The 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 impact of SMLP common units issued to SMP Holdings as consideration for Bison Midstream as if issued January 1, 2012
1,553,849

Pro forma diluted weighted-average number of SMLP common units outstanding
26,097,834


EXH 99.1-5