Summit Midstream (SMC) M&A Announcement summary

Deal rationale and strategic fit

• Acquisition of Tall Oak Midstream expands operations into the Arkoma Basin, adding 440 MMcf/d processing capacity and over 400 miles of pipelines, and aligns with the strategy to scale operations, rebalance commodity exposure, and accelerate shareholder returns.

• Transaction increases scale by 35% and rebalances EBITDA mix to a 50/50 split between gas- and oil-weighted basins, enhancing exposure to favorable natural gas macro trends.

• Tall Oak's assets offer long-term contracts, significant dedicated acreage, and access to premium markets, supporting predictable, low-risk development and strong free cash flow growth.

• Partnership with Tailwater Capital brings aligned, experienced investors and board members, supporting further consolidation and industry growth.

• Complements existing gas portfolio and supports long-term value creation initiatives.

Financial terms and conditions

• Total consideration is $450 million: $155 million upfront cash, 7.5 million Class B common stock and units, and $25 million earn-out by Q2 2026.

• Cash portion funded by existing credit facility or revolver borrowings, with potential for follow-on debt offering.

• Pro forma ownership: existing shareholders ~60%, Tailwater ~35–40%, non-Tailwater entity ~5%.

• Transaction structured as an Up-C for tax deferral; Tailwater equity subject to lockup (1 year for 100%, 2 years for 50%).

• Acquisition multiple is 5.6x 2025E asset-level Adjusted EBITDA at the midpoint of forecast.

Synergies and expected cost savings

• Integration of legacy compressors and G&A reductions expected to generate ~$3 million in annual operating synergies and support high free cash flow conversion rates of 70–80%.

• Minimal capital required for system expansion due to existing capacity.

• Value accretive transaction expected to lower pro forma leverage to 3.8x at closing, down from 4.4x.