Summit Midstream Enhances Growth with Tall Oak Midstream Deal

Summit Midstream Corporation Completes Acquisition of Tall Oak Midstream

Summit Midstream Corporation (NYSE: SMC) has recently announced a significant stride in its growth journey. The company, along with its subsidiary, Summit Midstream Partners, LP, has successfully finalized the acquisition of Tall Oak Midstream Operating, LLC and its subsidiaries. This acquisition, valued at $155 million in cash along with equity considerations of 7.5 million common units, marks a notable achievement for Summit as it diversifies and strengthens its portfolio.

The Details of the Acquisition

The acquisition involved a strategic financial structure, incorporating not just cash, but also equity components such as the issuance of common units of the Partnership and shares of SMC Class B Common Stock. Additionally, there is a provision for up to $25 million in contingent cash consideration based on specific performance metrics through 2026. This progressive move aligns with Summit’s vision to enhance its footprint in the midstream sector, specifically in natural gas-oriented drilling activities.

Shareholder Approval and Support

Before proceeding with the acquisition, Summit Midstream Corporation held a virtual special meeting for its shareholders. The turnout was impressive, with approximately 76.7% of the shares represented and a significant 99.8% of voting shareholders in favor of the acquisition. This overwhelming support demonstrates investor confidence in the strategic direction that Summit is undertaking.

About Summit Midstream Corporation

Summit Midstream Corporation is dedicated to developing and operating midstream energy infrastructure assets. The company is strategically located in key producing areas within unconventional resource basins, focusing on shale formations across the continental United States. Summit's operations include the gathering, processing, and transportation of natural gas, crude oil, and produced water under long-term agreements with its clients. Their assets span across prominent basins including the Williston, Denver-Julesburg, Fort Worth, Arkoma, and Piceance Basins.

Innovative Infrastructure Investments

In addition to the recent acquisition, SMC has made significant investments in innovative infrastructure such as the Double E Pipeline, enabling efficient interstate natural gas transportation from multiple receipt points to major delivery hubs. These investments emphasize Summit's commitment to enhancing its operational prowess and meeting the growing energy demands.

Financial Performance and Future Outlook

As of the last financial reporting, Summit Midstream's leverage ratio stood at approximately 3.8x, reflecting its solid foundation to support growing operations post-acquisition. The company remains committed to improving its financial health and pursuing further growth opportunities within the energy sector.

Frequently Asked Questions

What does the acquisition of Tall Oak Midstream entail?

The acquisition includes cash, equity considerations, and potential contingent cash, aimed at strengthening Summit's portfolio in the natural gas sector.

How did shareholders respond to the acquisition proposal?

Approximately 99.8% of the total votes cast by shareholders favored the acquisition, indicating robust support for the company's strategy.

What is the significance of Summit's growth strategy?

The growth strategy aims to diversify operations and improve balance in natural gas-oriented drilling activities while enhancing overall operational scalability.

Where is Summit Midstream Corporation headquartered?

Summit Midstream Corporation is strategically headquartered in Houston, Texas, a pivotal location for energy operations.

What does the future hold for Summit Midstream Corporation?

With this acquisition, Summit is poised to explore new growth opportunities and enhance its presence in the midstream sector, reinforcing its commitment to energy infrastructure development.

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