Summit Midstream Corporation ( SMC ) shares are surging Wednesday after the company announced the acquisition of Tall Oak Midstream Operating, LLC from Tailwater Capital LLC for $155 million in cash plus common stock.

Key Points:

Strategic Acquisition: The move expands Summit's operations in the Arkoma Basin, adding 440 MMcf/d in processing capacity, over 400 miles of pipelines and more than 300,000 dedicated acres.

Financial Impact: The deal lowers Summit’s pro forma leverage from 4.4x to 3.8x, positioning the company for potential dividends and stock buybacks in 2025. The acquisition is valued at approximately 5.6x the projected 2025 adjusted EBITDA.

Operational Benefits: Diversifies Summit's commodity portfolio to include both oil and natural gas, enhancing the ability to meet rising natural gas demand.

Governance: Tailwater Capital will own a 35% interest in the pro forma company, with Summit's management team remaining and the board expanding to include four new directors from Tailwater.

What Else: Summit will pay $155 million in cash and issue 7.5 million shares of a mix of SMC Class B common stock and Partnership common units. There is also a contingent cash consideration of $25 million. Summit will also host a call on October 2, 2024, to discuss the acquisition.

SMC Price Action: Summit Midstream ( SMC ) shares were up by 9.61% at $37.76 at the time of writing, according to Benzinga Pro.

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