uploads///SMLP MVCs

How Summit Midstream Benefits from MVC Contracts

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Sep. 13 2016, Updated 7:05 a.m. ET

Summit Midstream’s MVCs

In the previous article, we saw how three out of Summit Midstream Partners’ (SMLP) five business segments saw a decline in throughput volumes mainly due to lower drilling activity in the regions. At the same time, the partnership is protected to some extent from these volume declines through MVC (minimum volume commitment) contracts.

According to the 2Q16 earnings release, “The net impact of SMLP’s MVC shortfall payment mechanisms increased adjusted EBITDA by $16.0 million in the second quarter of 2016.” However, if the drilling activity stays low in some regions, then even the MVCs might not be safe.

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