Summit Midstream Partners LP on March 22 completed its restructuring deal to simplify its structure, as well as its $90 million sale of the Tioga crude oil, gas and water gathering system in the Bakken Shale.
Under the restructuring agreement, the incentive distribution rights and a 2% general partner interest in Summit Midstream, held by its general partner Summit Midstream GP LLC, were converted into 8,750,000 newly issued Summit Midstream common units and a non-economic general partner interest in Summit Midstream.
As a result of the deal, Summit Midstream Partners Holdings LLC now owns 34,604,581 Summit Midstream common units, equivalent to a 42.1% limited partner interest, according to a March 22 SEC filing. Summit Midstream Partners Holdings, or SMP Holdings, is the sole member of the general partner.
Summit Midstream's subsidiary Tioga Midstream LLC also closed its sale of the crude oil and gas gathering portion of the Tioga system to Hess Midstream Partners LP subsidiary Hess North Dakota Pipelines LLC; and the water gathering portion of the system to Hess Infrastructure Partners LP. The Tioga oil and gas gathering system is composed of about 73 miles of crude pipelines and 79 miles of gas pipelines, while the water gathering assets comprise 75 miles of produced water gathering pipelines.
Summit Midstream plans to use the sale proceeds to pay down outstanding debt under its revolving credit facility.
In addition, Summit Midstream is obligated to make a pre-payment of $100 million to SMP Holdings. The partnership would also pay $303.5 million to SMP Holdings from March 1, 2020, to Dec. 31, 2020, in one or more payments. Those payments may be made in cash, Summit Midstream common units or a combination of both. At least 50% of the remaining consideration should be paid by June 30, 2020. Any part of the consideration that remains unpaid after March 31, 2020, would be subject to interest at a rate of 8% per annum.