Summary of SMC Q2 2026 Earnings Call

1Key Financial Results and Metrics

Adjusted EBITDA: $60.7 million, a 12% increase from Q1 2026.

Distributable Cash Flow: $36.8 million.

Free Cash Flow: $9.4 million.

Capital Expenditures: $25 million for the quarter, including $4.1 million for maintenance.

Balance Sheet: $21 million in unrestricted cash, $79 million drawn on the revolver, total leverage at approximately 4.1x.

2Strategic Updates and Business Highlights

Well Connections: 36 wells turned in line during Q2 (16 in the DJ Basin, 20 in Mid-Con), with an additional 17 wells in the Williston post-quarter.

Rig Activity: 8 rigs currently operating in the Rockies, up from 5 in the previous quarter, indicating increased customer activity.

New Contracts: Secured two new gathering agreements in the Williston, adding visibility to approximately 30 new well connections.

Double E Project: Executed additional firm transportation agreements, bringing total contracted volume to over 1.9 Bcf per day; open season extended through August.

Mid-Con Segment: Positive performance from new wells in the emerging dry gas region within Arkoma.

3Forward Guidance and Outlook

Adjusted EBITDA Guidance: Tightened to $235 million - $255 million for the full year 2026.

Capital Expenditure Guidance: Increased to $100 million - $120 million, driven by new well connections and Double E project commitments.

Long-term Growth: Projecting over $100 million of organic growth by 2030, primarily from Rockies and Permian segments.

4Bad News, Challenges, or Points of Concern

Piceance Segment: Experienced a decline in EBITDA to $8.7 million, attributed to a 5.7% drop in volume throughput and temporary shut-ins due to low gas prices. Expected cash flow to decrease by approximately $4 million per quarter starting in Q4 2026 as MVC shortfall payments expire.

Commodity Price Sensitivity: Potential risks associated with fluctuating oil prices, which could impact rig activity and overall performance.

5Notable Q&A Insights

Incremental EBITDA from New Wells: Estimated contribution from the 30 new Williston wells could be around $10 million in 2027.

Double E Compression Expansion: Finalizing agreements to meet FID requirements, with expectations for a significant increase in EBITDA once fully contracted.

M&A Landscape: While there are opportunities, the focus remains on organic growth. The company is cautious about current market valuations and is prioritizing achieving leverage targets.

Debt Reduction and Capital Allocation: Emphasis on reducing debt while considering future dividends and share repurchases, with a medium-term leverage target of 3.5x. Overall, SMC reported strong Q2 results with positive momentum across its segments, though challenges in the Piceance segment and commodity price sensitivity remain concerns. The company is optimistic about future growth and strategic initiatives.