EnLink Midstream Refines Annual Guidance, Reports Second Quarter 2017 Results, Provides Commercial and Operational Updates
DALLAS, Aug. 1, 2017 /PRNewswire/ -- The EnLink Midstream companies (EnLink), EnLink Midstream Partners, LP (NYSE: ENLK) (the Partnership or ENLK) and EnLink Midstream, LLC (NYSE: ENLC) (the General Partner or ENLC), reported today a refined guidance outlook for full-year 2017, reported financial results for the second quarter of 2017, and provided commercial and operational updates.
Highlights
-- ENLK reported net income of $32.7 million and net income attributable to
ENLK after non-controlling interest of $29.6 million for the quarter
ended June 30, 2017. ENLK achieved $209.7 million of adjusted EBITDA net
to ENLK for the same period. Adjusted EBITDA is a non-GAAP measure and
is explained in greater detail under "Non-GAAP Financial Information."
-- ENLK refined full-year 2017 net income guidance to a range of $116
million to $148 million, from the previous range of $80 million to $120
million. ENLK also refined adjusted EBITDA guidance to a range of $840
million to $880 million, from the previous range of $815 million to $885
million.
-- ENLC reported net income of $27.1 million and net income attributable to
ENLC after non-controlling interest of $5.9 million for the quarter
ended June 30, 2017. ENLC achieved $52.6 million of cash available for
distribution for the same period. ENLC also reaffirmed its previously
issued guidance outlook for 2017. Cash available for distribution is a
non-GAAP measure and is explained in greater detail under "Non-GAAP
Financial Information."
-- EnLink is expanding in the core of the STACK play in Central Oklahoma
with the construction of a new crude oil gathering system, called the
Black Coyote crude oil gathering system, primarily to support Devon
Energy Corp.'s successful ongoing development of their acreage in the
STACK, including Devon's multi-zone Showboat project.
-- EnLink's Central Oklahoma platform experienced strong volume growth
during the second quarter of 2017, with gas gathering and processing
volumes up nine and 13 percent, respectively, from the first quarter of
2017. Gas gathering and processing volumes are up 26 and 31 percent,
respectively, from the second quarter of 2016. Volume growth is
projected to continue building as Devon and other active producer
customers deliver strong well results and continue the transition to
full-scale development targeting multiple producing horizons.
-- EnLink's Cajun-Sibon system began benefiting from NGL production driven
by Central Oklahoma and Permian processing growth during the quarter.
NGL volume throughput on the Cajun-Sibon system increased 10 percent
during the quarter, with continued volume growth projected throughout
the rest of the year.
-- EnLink continued to demonstrate positive volume momentum in the Permian,
with gas gathering and processing volumes increasing nine and six
percent, respectively, from the first quarter of 2017. Gas gathering and
processing volumes are up 37 and 21 percent, respectively, from the
second quarter of 2016. Rig count on EnLink's Delaware Basin footprint
exceeded expectations during the second quarter of 2017, increasing 50
percent from April to July 2017. Year-to-date, rigs on EnLink's Delaware
footprint have increased from one to 18, as EnLink continues to partner
with large, active, investment-grade producers in Lea and Eddy counties
in New Mexico, and Loving County, Texas.
"We are pleased to report another solid quarter of operating and financial results while executing on our long-term strategic growth plan," said Barry E. Davis, EnLink Chairman and Chief Executive Officer. "We continue to advance our strategic organic development projects throughout our core growth areas, including our latest announcement to commence crude oil gathering services in the STACK. We are encouraged by the volume momentum we are realizing across our core growth areas, and expect volume rates to accelerate as we exit 2017. We remain committed to growing unitholder value and maintaining a strong balance sheet, with an increased focus on building near-term distribution coverage and long-term distribution growth."
EnLink Midstream Partners, LP: Second Quarter 2017 Financial Results
-- The Partnership reported net income attributable to ENLK of $29.6
million for the second quarter of 2017, compared to net income of $5
million for the second quarter of 2016.
-- The Partnership achieved $209.7 million of adjusted EBITDA net to ENLK
for the second quarter of 2017, compared to $187.4 million for the
second quarter of 2016. Included in adjusted EBITDA for the second
quarter of 2017 was $8.5 million related to a gain on litigation
settlement. Included in adjusted EBITDA for the second quarter of 2016
was approximately $6 million related to non-core assets that were sold
prior to the second quarter of 2017.
-- The Partnership achieved net cash provided by operating activities of
$158 million for the second quarter of 2017, compared to net cash
provided by operating activities of $110.5 million for the second
quarter of 2016.
-- Distributable cash flow (DCF) attributable to ENLK was $154.3 million
for the second quarter of 2017, as compared to $150.9 million for the
second quarter of 2016. Included in DCF for the second quarter of 2017
is $2.7 million related to the litigation settlement noted above.
-- ENLK refined full-year 2017 net income guidance to a range of $116
million to $148 million, from the previous range of $80 million to $120
million. ENLK also refined full-year 2017 adjusted EBITDA guidance to a
range of $840 million to $880 million, from the previous range of $815
million to $885 million, inclusive of $26 million of litigation
settlements. It is EnLink's expectation that no further material
litigation settlements will be realized during 2017.
-- Growth capital expenditures net to ENLK for the second quarter of 2017
totaled $172 million. Growth capital expenditures for the first half of
2017 totaled $379 million net to ENLK. Guidance for 2017 growth capital
expenditures net to ENLK remains unchanged at a range of $505 million to
$645 million. Growth capital expenditures figures do not include
capitalized interest.
-- ENLK completed a successful debt offering through the issuance of $500
million aggregate principal amount of its 5.45 percent unsecured senior
notes due in 2047. Proceeds raised from the offering were used to repay
outstanding borrowings under ENLK's credit facility and for general
partnership purposes. Subsequently, ENLK redeemed $162.5 million of
outstanding senior unsecured notes due in 2022 with a 7.125 percent
coupon.
-- As of July 27, 2017, ENLK had 347,501,069 common units outstanding.
EnLink Midstream, LLC: Second Quarter 2017 Financial Results
-- The General Partner reported net income of $27.1 million for the second
quarter of 2017, compared to net income of $1.2 million in the second
quarter of 2016.
-- Cash available for distribution was $52.6 million for the second quarter
of 2017, compared to $49.8 million in the second quarter of 2016.
Included in cash available for distribution for the second quarter of
2017 was $6.5 million related to ENLC's 16 percent interest in EnLink
Oklahoma T.O.
-- ENLC reaffirmed full-year 2017 financial guidance.
-- Growth capital expenditures net to ENLC for the second quarter of 2017
totaled $19 million. Growth capital expenditures for the first half of
2017 totaled $40 million. Guidance for 2017 growth capital expenditures
net to ENLC remains unchanged at a range of $60 million to $70 million.
Growth capital expenditures figures do not include capitalized interest.
-- As of July 27, 2017, ENLC had 180,574,392 common units outstanding.
Commercial and Operational Updates
Central Oklahoma:
-- EnLink is expanding in the core of Central Oklahoma's STACK play with
the announcement of the Black Coyote crude oil gathering system, which
will primarily support Devon's transition from delineation to full-field
development of their acreage in the STACK. The Black Coyote system is
expected to be operational in the first quarter of 2018, and will match
volumes coming on-line from Devon's multi-zone Showboat development.
Growth capital expenditures are expected to be in the range of $10
million to $15 million in 2017. ENLC is expected to invest in the
expansion to maintain its 16 percent ownership interest in EnLink
Oklahoma T.O.
-- EnLink experienced strong volume growth during the second quarter of
2017, with gas gathering and processing volumes up nine and 13 percent,
respectively, from the first quarter of 2017. Strong volume growth is
projected to continue throughout the second half of 2017, spurred in
part by high-rate wells coming on-line in both the core of the STACK and
the Merge play.
-- EnLink's previously announced expansion of its Chisholm complex in the
STACK by an additional 200 MMcf/d is progressing well and the Chisholm
III plant is expected to be operational during the fourth quarter of
2017. Once operational, Chisholm III will increase EnLink's total
processing capacity in Central Oklahoma to 1 billion cubic feet per day
and EnLink will continue to be one of the largest providers of gas
processing in the area.
Midland Basin:
-- EnLink is well-positioned to benefit from increasing activity levels
across its acreage as several of its producer customers in the basin
make the strategic shift to large-scale development projects. Multi-well
pad developments are expected to come on-line over the next three to 12
months. These types of developments will play an increasingly important
role in EnLink's natural gas volume growth trajectory.
-- Currently, EnLink's Midland Basin natural gas assets are running at
approximately 55 percent utilization, and have capacity to handle large
amounts of incremental production with very little additional growth
capital expenditures. EnLink also has the majority of infrastructure in
place to cost effectively expand the Riptide gas processing facility by
an additional 100 MMcf/d as volumes continue to grow.
-- West Texas crude and condensate volumes increased 12 percent from the
first quarter of 2017 to the second quarter of 2017, as the Greater
Chickadee crude oil gathering system was fully operational for the
majority of the second quarter. The integrated system moved from initial
operations to full-service during the second quarter of 2017.
Delaware Basin:
-- Rigs operating on EnLink's footprint increased by 50 percent from April
to July 2017, with 18 rigs currently contributing to volume growth on
the Lobo system. Year-to-date, rigs have increased from one rig to 18
rigs as EnLink continues to partner with large, active, investment grade
producers in Lea and Eddy counties in New Mexico, and Loving County,
Texas.
-- In anticipation of this volume growth, EnLink completed the 60 MMcf/d
expansion of gas processing capacity at the Delaware Basin Joint
Venture's Lobo II facility during the second quarter of 2017, which
brought nameplate capacity at the facility to 120 MMcf/d. EnLink
previously announced plans to further expand nameplate capacity of Lobo
II by an additional 30 MMcf/d in the fourth quarter of 2017, which will
bring total capacity in the area to 185 MMcf/d by year-end. Given the
on-going pace of activity in the area, EnLink is evaluating the next
phase of gas processing capacity expansion for the Delaware Basin Joint
Venture, and could pursue additional expansions in the near future.
Louisiana:
-- EnLink's Cajun-Sibon system began benefiting from liquids output from
the Chisholm II plant during the quarter. Natural gas liquid (NGL)
volumes on the Cajun-Sibon system increased 10 percent during the second
quarter of 2017 when compared to first quarter of 2017, due to the
increase in Chisholm II volumes connected to Cajun-Sibon and due to a
short-term benefit from operational impacts related to Mont Belvieu area
maintenance.
-- EnLink recently announced a long-term, fee-based agreement with ONEOK to
transport NGLs from EnLink's Chisholm processing complex to the Gulf
Coast and the Cajun-Sibon system. The agreement is well-aligned with
EnLink's long-term strategic growth plan by allowing EnLink to retain
control of volumes and preferentially fill EnLink's Cajun-Sibon
platform. The transaction was immediately accretive to EnLink's earnings
and required no incremental growth capital expenditures by EnLink.
EnLink continues to evaluate options to expand fractionation and
transportation operations in the area.
-- EnLink moved the Ascension Joint Venture pipeline into full operations
during the second quarter of 2017, after a safe and successful start-up
during the first quarter of 2017.
-- EnLink continued to experience strong volumes on its Louisiana gas
system during the second quarter of 2017, as demand across the footprint
remained high. EnLink continued to enhance operational capabilities and
capture new and existing business during the second quarter of 2017.
North Texas:
-- EnLink experienced a flattening of volume declines in the Barnett during
the second quarter of 2017, with gathering, transmission and processing
volumes down on average by approximately one percent when compared to
the first quarter of 2017. EnLink's platform benefited from pressure
reduction initiatives completed during 2016, refracking of existing
wells and contracting new volumes to the system.
-- Devon previously announced 2017 capital investment increases related to
its northern Barnett Shale operations, which included a six well program
to apply new horizontal refrac techniques. The refrac project has been
completed, and results indicate 400 percent increased production
per-well with costs as low as $650,000 per well. Devon's capital
investments also include the initiation of a new rig-line drilling pilot
of six wells during the third quarter of 2017, with results expected by
year-end.
-- Devon previously announced its intent to divest approximately $1 billion
of non-core upstream assets across its portfolio, including select
portions of its Barnett Shale position, with a focus on Johnson County
properties. EnLink holds acreage dedication rights related to Devon's
East Johnson County operations, with current midstream services provided
in this area representing approximately 7 percent of EnLink's total
North Texas revenues. If completed, Devon's divestiture of the Johnson
County assets could translate into a strengthening of volumes to EnLink
over the mid-to-long term, assuming the counterparty actively develops
the area.
Second Quarter 2017 Earnings Call Details
The General Partner and the Partnership will hold a conference call to discuss second quarter 2017 financial results on Wednesday, August 2, 2017, at 9 a.m. Central Time (10 a.m. Eastern Time). The dial-in number for the call is 1-855-656-0924. Callers outside the United States should dial 1-412-542-4172. Participants can also preregister for the conference call by navigating to http://dpregister.com/10109511 where they will receive dial-in information upon completion of preregistration. Interested parties can access an archived replay of the call on the Investors' page of EnLink's website at www.EnLink.com.
About the EnLink Midstream Companies
EnLink provides integrated midstream services across natural gas, crude oil, condensate, and NGL commodities. EnLink operates in several top U.S. basins and is strategically focused on the core growth areas of the Permian's Midland and Delaware basins, Oklahoma's Midcontinent, and Louisiana's Gulf Coast. Headquartered in Dallas, EnLink is publicly traded through EnLink Midstream, LLC (NYSE: ENLC), the General Partner, and EnLink Midstream Partners, LP (NYSE: ENLK), the Master Limited Partnership. Visit www.EnLink.com for more information on how EnLink connects energy to life.
Non-GAAP Financial Information
This press release contains non-generally accepted accounting principle financial measures that we refer to as adjusted EBITDA, distributable cash flow, gross operating margin, and the General Partner's cash available for distribution. We define adjusted EBITDA as net income (loss) plus interest expense, provision for income taxes, depreciation and amortization expense, impairment expense, unit-based compensation, (gain) loss on non-cash derivatives, (gain) loss on disposition of assets, (gain) loss on extinguishment of debt, successful transaction costs, accretion expense associated with asset retirement obligations, reimbursed employee costs, non-cash rent and distributions from unconsolidated affiliate investments less payments under onerous performance obligations, non-controlling interest and income (loss) from unconsolidated affiliate investments. We define distributable cash flow as adjusted EBITDA (defined above), net to the Partnership, less interest expense (excluding amortization of the EnLink Oklahoma T.O. acquisition installment payable discount), litigation settlement adjustment, adjustments for the redeemable non-controlling interest, interest rate swaps, current income taxes and other, and maintenance capital expenditures. We define gross operating margin as revenues less cost of sales. The General Partner's cash available for distribution is defined as net income (loss) of the General Partner less the net income (loss) of the Partnership, which is consolidated into the General Partner's net income (loss), plus the General Partner's share of distributions from the Partnership, the General Partner's share of EnLink Oklahoma T.O. non-cash expenses, maintenance capital expenditures, the General Partner's deferred income tax expense (benefit), the General Partner's corporate goodwill impairment and the General Partner's acquisition transaction costs attributable to its share of the EnLink Oklahoma T.O. acquisition.
The Partnership's coverage ratio is calculated by dividing distributable cash flow by distributions paid to the General Partner and the unitholders. The General Partner's coverage ratio is calculated by dividing cash available for distribution by distributions paid by the General Partner. Growth capital expenditures generally include capital expenditures made for acquisitions or capital improvements that we expect will increase our asset base, operating income or operating capacity over the long-term. Maintenance capital expenditures include capital expenditures made to replace partially or fully depreciated assets in order to maintain the existing operating capacity of the assets and to extend their useful lives.
The Partnership and General Partner believe these measures are useful to investors because they may provide users of this financial information with meaningful comparisons between current results and prior-reported results and a meaningful measure of the Partnership's and the General Partner's cash flow after it has satisfied the capital and related requirements of its operations. In addition, adjusted EBITDA achievement is a primary metric used in the Partnership's credit facility and short-term incentive program for compensating its employees.
Gross operating margin, adjusted EBITDA, distributable cash flow, and cash available for distribution, as defined above, are not measures of financial performance or liquidity under GAAP. They should not be considered in isolation or as an indicator of the Partnership's and the General Partner's performance. Furthermore, they should not be seen as a substitute for metrics prepared in accordance with GAAP. Reconciliations of these measures to their most directly comparable GAAP measures are included in the following tables. See ENLK's and ENLC's filings with the Securities and Exchange Commission for more information.
Forward-Looking Statements
This press release contains forward-looking statements within the meaning of the federal securities laws. Although these statements reflect the current views, assumptions and expectations of our management, the matters addressed herein involve certain assumptions, risks and uncertainties that could cause actual activities, performance, outcomes and results to differ materially from those indicated. Such forward-looking statements include, but are not limited to, statements about guidance, projected or forecasted financial and operating results, operational results of our customers, results in certain basins, future rig count information, objectives, project timing, expectations and intentions and other statements that are not historical facts. Factors that could result in such differences or otherwise materially affect our financial condition, results of operations and cash flows include, without limitation,(a) the dependence on Devon for a substantial portion of the natural gas that we gather, process and transport, (b) developments that materially and adversely affect Devon or our other customers, (c) adverse developments in the midstream business may reduce our ability to make distributions, (d) our vulnerability to having a significant portion of our operations concentrated in the Barnett Shale, (e) the amount of hydrocarbons transported in our gathering and transmission lines and the level of our processing and fractionation operations, (f) impairments to goodwill, long-lived assets and equity method investments, (g) our ability to balance our purchases and sales, (h) fluctuations in oil, natural gas and NGL prices, (i) construction risks in our major development projects, (j) conducting certain of our operations through joint ventures, (k) reductions in our credit ratings, (l) our debt levels and restrictions contained in our debt documents, (m) our ability to consummate future acquisitions, successfully integrate any acquired businesses, realize any cost savings and other synergies from any acquisition, (n) changes in the availability and cost of capital, (o) competitive conditions in our industry and their impact on our ability to connect hydrocarbon supplies to our assets, (p) operating hazards, natural disasters, weather-related delays, casualty losses and other matters beyond our control, (q) a failure in our computing systems or a cyber-attack on our systems, and (r) the effects of existing and future laws and governmental regulations, including environmental and climate change requirements and other uncertainties. These and other applicable uncertainties, factors and risks are described more fully in EnLink Midstream Partners, LP's and EnLink Midstream, LLC's filings with the Securities and Exchange Commission, including EnLink Midstream Partners, LP's and EnLink Midstream, LLC's Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K. Neither EnLink Midstream Partners, LP nor EnLink Midstream, LLC assumes any obligation to update any forward-looking statements.
The assumptions and estimates underlying the forecasted financial information included in the guidance information in this press release are inherently uncertain and, though considered reasonable by the EnLink Midstream management team as of the date of its preparation, are subject to a wide variety of significant business, economic, and competitive risks and uncertainties that could cause actual results to differ materially from those contained in the forecasted financial information. Accordingly, there can be no assurance that the forecasted results are indicative of EnLink Midstream's future performance or that actual results will not differ materially from those presented in the forecasted financial information. Inclusion of the forecasted financial information in this press release should not be regarded as a representation by any person that the results contained in the forecasted financial information will be achieved.
EnLink Midstream Partners, LP
Selected Financial Data
(All amounts in millions except per unit amounts)
(Unaudited)
Three Months Ended Six Months Ended
June 30, June 30,
2017 2016 2017 2016
---- ---- ---- ----
Total revenues $1,263.6 $1,033.2 $2,585.5 $1,922.9
Cost of sales (1) 932.4 732.4 1,934.7 1,318.6
----- ----- ------- -------
Gross operating margin 331.2 300.8 650.8 604.3
Operating costs and expenses:
Operating expenses (2) 102.6 100.1 206.7 198.3
General and
administrative 29.6 29.1 64.6 62.3
(Gain) loss on
disposition of assets (5.4) 0.3 (0.3) 0.1
Depreciation and
amortization 142.5 124.9 270.8 246.8
Impairments - - 7.0 566.3
Gain on litigation
settlement (8.5) - (26.0) -
---- --- ----- ---
Total operating costs
and expenses 260.8 254.4 522.8 1,073.8
----- ----- ----- -------
Operating income (loss) 70.4 46.4 128.0 (469.5)
Other income (expense):
Interest expense, net
of interest income (47.1) (46.2) (91.6) (89.9)
Gain on extinguishment
of debt 9.0 - 9.0 -
Income (loss) from
unconsolidated
affiliates (0.1) 0.8 0.6 (1.6)
Other income (expense) 0.2 (0.1) 0.2 -
--- ---- --- ---
Total other expense (38.0) (45.5) (81.8) (91.5)
----- ----- ----- -----
Income (loss) before
non-controlling
interest and income
taxes 32.4 0.9 46.2 (561.0)
Income tax benefit
(provision) 0.3 2.3 (0.2) 1.3
--- ---
Net income (loss) 32.7 3.2 46.0 (559.7)
Net income (loss)
attributable to non-
controlling interest 3.1 (1.8) (1.7) (4.3)
--- ---- ---- ----
Net income (loss)
attributable to EnLink
Midstream Partners, LP $29.6 $5.0 $47.7 $(555.4)
===== ==== ===== =======
General partner
interest in net income $10.8 $10.6 $16.7 $18.0
===== ===== ===== =====
Limited partners'
interest in net loss
attributable to EnLink
Midstream Partners, LP $(0.5) $(23.5) $(9.8) $(590.7)
===== ===== =======
Class C partners'
interest in net loss
attributable to EnLink
Midstream Partners, LP $ - $(0.1) $ - $(12.5)
=== === ===== === === ======
Preferred interest in
net income
attributable to EnLink
Midstream Partners, LP $19.3 $18.0 $40.8 $29.8
===== ===== ===== =====
Net loss attributable to EnLink
Midstream Partners, LP per limited
partners' unit:
Basic common unit $ - $(0.07) $(0.03) $(1.80)
=== === ====== ====== ======
Diluted common unit $ - $(0.07) $(0.03) $(1.80)
=== === ====== ====== ======
(1) Includes related party cost of
sales of $50.9 million and
$49.8 million for the three
months ended June 30, 2017 and
2016, respectively, and $79.6
million and $92.4 million for
the six months ended June 30,
2017 and 2016, respectively.
(2) Includes related party operating
expenses of $0.3 million and
$0.2 million for the three
months ended June 30, 2017 and
2016, respectively, and $0.5
million and $0.3 million for
the six months ended June 30,
2017 and 2016, respectively.
EnLink Midstream Partners, LP
Reconciliation of Net Income (Loss) to Adjusted EBITDA and Distributable Cash Flow and Calculation of Coverage Ratio
(All amounts in millions except ratios and per unit amounts)
(Unaudited)
Three Months Ended Six Months Ended
June 30, June 30,
2017 2016 2017 2016
---- ---- ---- ----
Net income (loss) $32.7 $3.2 $46.0 $(559.7)
Interest expense, net
of interest income 47.1 46.2 91.6 89.9
Depreciation and
amortization 142.5 124.9 270.8 246.8
Impairments - - 7.0 566.3
(Income) loss from
unconsolidated
affiliates (1) 0.1 (0.8) (0.6) 1.6
Distribution from
unconsolidated
affiliates 4.5 5.6 7.4 14.8
(Gain) loss on
disposition of assets (5.4) 0.3 (0.3) 0.1
Gain on extinguishment
of debt (9.0) - (9.0) -
Unit-based
compensation 9.3 7.3 28.6 15.2
Income tax (benefit)
provision (0.3) (2.3) 0.2 (1.3)
(Gain) loss on non-
cash derivatives (1.8) 7.8 (7.1) 14.3
Payments under onerous
performance
obligation offset to
other current and
long-term
liabilities (4.5) (4.6) (9.0) (9.0)
Other (2) 1.9 1.9 2.7 6.3
--- --- --- ---
Adjusted EBITDA before
non-controlling
interest $217.1 $189.5 $428.3 $385.3
Non-controlling
interest share of
adjusted EBITDA (3) (7.4) (2.1) (11.0) (2.9)
---- ---- ----- ----
Adjusted EBITDA, net
to EnLink Midstream
Partners, LP $209.7 $187.4 $417.3 $382.4
------ ------ ------ ------
Interest expense, net
of interest income (47.1) (46.2) (91.6) (89.9)
Amortization of EnLink
Oklahoma T.O.
installment payable
discount included in
interest expense (4) 6.5 13.3 13.5 25.7
Litigation settlement
adjustment (5) (5.8) - (18.1) -
Non-cash adjustment
for redeemable non-
controlling interest - 0.1 - 0.3
Current taxes and
other 0.4 2.0 (0.2) 1.0
Maintenance capital
expenditures (9.4) (5.7) (13.6) (13.2)
---- ---- ----- -----
Distributable cash
flow $154.3 $150.9 $307.3 $306.3
====== ====== ====== ======
Actual declared
distribution $151.9 $146.8 $303.3 $288.9
Distribution Coverage 1.02x 1.03x 1.01x 1.06x
Distributions declared
per limited partner
unit $0.39 $0.39 $0.78 $0.78
(1) Includes a loss of $3.4 million
for the six months ended June
30, 2017 from the sale of HEP in
March 2017.
(2) Includes the following: accretion
expense associated with asset
retirement obligations;
reimbursed employee costs from
Devon and LPC Crude Oil
Marketing LLC ("LPC");
successful acquisition
transaction costs, which we do
not consider in determining
adjusted EBITDA because
operating cash flows are not
used to fund such costs; and
non-cash rent, which relates to
lease incentives pro-rated over
the lease term.
(3) Non-controlling interest share
of adjusted EBITDA includes
ENLC's 16% share of adjusted
EBITDA from EnLink Oklahoma
T.O., NGP Natural Resources XI,
L.P.'s ("NGP") 49.9% share of
adjusted EBITDA from the
Delaware Basin JV, which was
formed in August 2016, Marathon
Petroleum's 50% share of
adjusted EBITDA from the
Ascension JV, which began
operations in April 2017, and
other minor non-controlling
interests.
(4) Amortization of the EnLink
Oklahoma T.O. installment
payable discount is considered
non-cash interest under the
ENLK credit facility since the
payment under the payable is
consideration for the
acquisition of the EnLink
Oklahoma T.O. assets.
(5) Represents recoveries from
litigation settlement for
amounts not previously deducted
from distributable cash flow.
EnLink Midstream Partners, LP
Reconciliation of Net Cash Provided by Operating Activities to Adjusted EBITDA
and Distributable Cash Flow
(All amounts in millions)
(Unaudited)
Three Months Ended Six Months Ended
June 30, June 30,
2017 2016 2017 2016
---- ---- ---- ----
Net cash provided by
operating activities $158.0 $110.5 $332.2 $299.6
Interest expense, net
(1) 40.1 32.8 77.4 64.2
Current income tax (0.6) (2.0) 0.2 (1.0)
Distributions from
unconsolidated
affiliate investment
in excess of earnings 4.5 5.6 7.4 14.8
Other (2) 4.8 0.9 5.7 5.4
Changes in operating assets and
liabilities which (provided) used
cash:
Accounts receivable,
accrued revenues,
inventories and other (2.6) 61.3 (22.0) 14.4
Accounts payable,
accrued gas and crude
oil purchases and
other (3) 12.9 (19.6) 27.4 (12.1)
Adjusted EBITDA before
non-controlling
interest $217.1 $189.5 $428.3 $385.3
Non-controlling
interest share of
adjusted EBITDA (4) (7.4) (2.1) (11.0) (2.9)
Adjusted EBITDA, net
to EnLink Midstream
Partners, LP $209.7 $187.4 $417.3 $382.4
------ ------ ------ ------
Interest expense, net
of interest income (47.1) (46.2) (91.6) (89.9)
Amortization of EnLink
Oklahoma T.O.
installment payable
discount included in
interest expense (5) 6.5 13.3 13.5 25.7
Litigation settlement
adjustment (6) (5.8) - (18.1) -
Non-cash adjustment
for redeemable non-
controlling interest - 0.1 - 0.3
Current taxes and
other 0.4 2.0 (0.2) 1.0
Maintenance capital
expenditures (9.4) (5.7) (13.6) (13.2)
---- ---- ----- -----
Distributable cash
flow $154.3 $150.9 $307.3 $306.3
====== ====== ====== ======
(1) Net of amortization of debt issuance
costs, discount and premium, and
valuation adjustment for redeemable
non-controlling interest included
in interest expense but not included
in net cash provided by operating
activities.
(2) Includes the following: successful
acquisition transaction costs, which
we do not consider in determining
adjusted EBITDA because operating
cash flows are not used to fund such
costs, non-cash rent, which relates
to lease incentives pro-rated over
the lease term, gains and losses on
settled interest rate swaps
designated as hedges related to debt
issuances, which are recorded in
other comprehensive income (loss),
and reimbursed employee costs from
Devon and LPC, which are costs
reimbursed to us by previous
employers pursuant to acquisition or
merger.
(3) Net of payments under onerous
performance obligation offset to
other current and long-term
liabilities.
(4) Non-controlling interest share of
adjusted EBITDA includes ENLC's 16%
share of adjusted EBITDA from EnLink
Oklahoma T.O., NGP's 49.9% share of
adjusted EBITDA from the Delaware
Basin JV, which was formed in August
2016, Marathon Petroleum's 50% share
of adjusted EBITDA from the
Ascension JV, which began operations
in April 2017, and other minor non-
controlling interests.
(5) Amortization of the EnLink Oklahoma
T.O. installment payable discount is
considered non-cash interest under
the ENLK credit facility since the
payment under the payable is
consideration for the acquisition of
the EnLink Oklahoma T.O. assets.
(6) Represents recoveries from litigation
settlement for amounts not
previously deducted from
distributable cash flow.
EnLink Midstream Partners, LP
Operating Data
(Unaudited)
Three Months Ended Six Months Ended
June 30, June 30,
2017 2016 2017 2016
---- ---- ---- ----
Midstream Volumes:
Texas
Gathering and
Transportation
(MMBtu/d) (1) 2,272,100 2,651,000 2,273,100 2,697,200
Processing (MMBtu/d) 1,179,700 1,194,200 1,170,900 1,196,200
Louisiana
Gathering and
Transportation
(MMBtu/d) 1,939,500 1,576,200 1,935,400 1,525,600
Processing (MMBtu/d) 446,500 483,600 457,100 500,700
NGL Fractionation
(Gals/d) 5,819,600 5,303,700 5,534,100 5,162,000
Oklahoma
Gathering and
Transportation
(MMBtu/d) 765,500 619,300 735,600 618,200
Processing (MMBtu/d) 733,100 575,600 693,200 572,600
Crude and Condensate
Crude Oil Handling
(Bbls/d) 107,600 97,700 109,000 111,200
Brine Disposal
(Bbls/d) 4,800 3,300 4,600 3,400
(1) Gathering and transportation
volumes in Texas for the three
and six months ended June 30,
2016 included 257,000 MMBtu/d
and 274,000 MMBtu/d,
respectively, related to the
North Texas Pipeline, which was
divested in the fourth quarter of
2016.
EnLink Midstream, LLC
Selected Financial Data
(All amounts in millions except per unit amounts)
(Unaudited)
Three Months Ended Six Months Ended
June 30, June 30,
2017 2016 2017 2016
---- ---- ---- ----
Total revenues $1,263.6 $1,033.2 $2,585.5 $1,922.9
Cost of sales (1) 932.4 732.4 1,934.7 1,318.6
----- ----- ------- -------
Gross operating margin 331.2 300.8 650.8 604.3
Operating costs and expenses:
Operating expenses (2) 102.6 100.1 206.7 198.3
General and administrative 31.1 30.3 67.2 65.4
(Gain) loss on disposition of
assets (5.4) 0.3 (0.3) 0.1
Depreciation and amortization 142.5 124.9 270.8 246.8
Impairments - - 7.0 873.3
Gain on litigation settlement (8.5) - (26.0) -
---- --- ----- ---
Total operating costs and
expenses 262.3 255.6 525.4 1,383.9
----- ----- ----- -------
Operating income (loss) 68.9 45.2 125.4 (779.6)
Other income (expense):
Interest expense, net of
interest income (47.7) (46.5) (92.6) (90.5)
Gain on extinguishment of debt 9.0 - 9.0 -
Income (loss) from
unconsolidated affiliates (0.1) 0.8 0.6 (1.6)
Other income (expense) 0.2 (0.1) 0.2 -
--- ---- --- ---
Total other expense (38.6) (45.8) (82.8) (92.1)
----- ----- ----- -----
Income (loss) before non-
controlling interest and income
taxes 30.3 (0.6) 42.6 (871.7)
Income tax benefit (provision) (3.2) 1.8 (6.2) 1.6
---- --- ---- ---
Net income (loss) 27.1 1.2 36.4 (870.1)
Net income (loss) attributable
to non-controlling interest 21.2 0.4 32.4 (413.3)
---- --- ---- ------
Net income (loss) attributable
to EnLink Midstream, LLC $5.9 $0.8 $4.0 $(456.8)
==== ==== ==== =======
Net income (loss) attributable to EnLink
Midstream, LLC per unit:
Basic common unit $0.03 $0.01 $0.02 $(2.55)
----- ----- ----- ------
Diluted common unit $0.03 $0.01 $0.02 $(2.55)
===== ===== ===== ======
(1) Includes related party cost of
sales of $50.9 million and
$49.8 million for the three
months ended June 30, 2017 and
2016, respectively, and $79.6
million and $92.4 million for
the six months ended June 30,
2017 and 2016, respectively.
(2) Includes related party operating
expenses of $0.3 million and
$0.2 million for the three
months ended June 30, 2017 and
2016, respectively, and $0.5
million and $0.3 million for
the six months ended June 30,
2017 and 2016, respectively.
EnLink Midstream, LLC
Cash Available for Distribution and Calculation of Coverage Ratio
(All amounts in millions except ratios and per unit amounts)
(Unaudited)
Three Months Ended Six Months Ended
June 30, June 30,
2017 2016 2017 2016
---- ---- ---- ----
Distribution declared by ENLK
associated with (1):
General partner
interest $0.7 $0.5 $1.3 $1.1
Incentive
distribution rights 14.6 14.2 29.3 28.0
ENLK common units
owned 34.6 34.5 69.1 69.0
---- ---- ---- ----
Total share of ENLK
distributions
declared $49.9 $49.2 $99.7 $98.1
Adjusted EBITDA of
EnLink Oklahoma
T.O. (2) 5.1 $2.1 7.7 $3.0
Transaction costs
(3) - $(0.1) - $0.6
--- ---
Total cash available $55.0 $51.2 $107.4 $101.7
----- ----- ------ ------
Uses of cash:
General and
administrative
expenses (1.6) (1.1) (2.6) (2.9)
Current income taxes
(4) (0.2) - (0.2) -
Interest expense (0.6) (0.3) (1.0) (0.6)
Total cash used $(2.4) $(1.4) $(3.8) $(3.5)
ENLC cash available
for distribution $52.6 $49.8 $103.6 $98.2
===== ===== ====== =====
Distribution
declared per ENLC
unit $0.255 $0.255 $0.510 $0.510
Cash distribution
declared $46.7 $46.5 $93.4 $93.0
Distribution
coverage 1.13x 1.07x 1.11x 1.06x
(1) Represents distributions to be
paid to ENLC on August 11, 2017
and distributions paid on May
12, 2017, August 11, 2016 and
May 12, 2016.
(2) Represents ENLC's interest in
EnLink Oklahoma T.O. adjusted
EBITDA, which is disbursed to
ENLC by EnLink Oklahoma T.O. on
a monthly basis. EnLink
Oklahoma T.O. adjusted EBITDA
is defined as earnings before
depreciation and amortization
and provision for income taxes
and includes allocated expenses
from ENLK.
(3) Represents acquisition
transaction costs attributable
to ENLC's 16% interest in
EnLink Oklahoma T.O, which are
considered growth capital
expenditures as part of the
cost of the assets acquired.
(4) Represents ENLC's stand-alone
current tax expense.
EnLink Midstream, LLC
Reconciliation of Net Income (Loss) of ENLC to ENLC Cash Available for Distribution
(All amounts in millions)
(Unaudited)
Three Months Ended Six Months Ended
June 30, June 30,
2017 2016 2017 2016
---- ---- ---- ----
Net income (loss)
of ENLC $27.1 $1.2 $36.4 $(870.1)
Less: Net income
(loss)
attributable to
ENLK 29.6 5.0 47.7 (555.4)
Net loss of ENLC
excluding ENLK $(2.5) $(3.8) $(11.3) $(314.7)
ENLC's share of
distributions
from ENLK (1) 49.9 49.2 99.7 98.1
ENLC's interest
in EnLink
Oklahoma T.O.'s
non-cash
expenses (2) 4.2 3.6 8.2 6.8
ENLC deferred
income tax
(benefit)
expense (3) 3.3 0.5 5.8 (0.3)
ENLC corporate
goodwill
impairment - - - 307.0
Non-controlling
interest share
of ENLK's net
income (loss)
(4) (2.2) 0.3 1.2 0.5
Other items (5) (0.1) - - 0.8
---- --- --- ---
ENLC cash
available for
distribution $52.6 $49.8 $103.6 $98.2
===== ===== ====== =====
(1) Represents distributions declared
by ENLK and to be paid to ENLC on
August 11, 2017 and distributions
paid by ENLK to ENLC on May 12,
2017, August 11, 2016 and May 12,
2016.
(2) Includes depreciation and
amortization and unit-based
compensation expense allocated to
EnLink Oklahoma T.O. for the
three and six months ended June
30, 2017, and depreciation and
amortization for the three and
six months ended June 30, 2016.
(3) Represents ENLC's stand-alone
deferred taxes.
(4) Represents NGP's 49.9% share of
adjusted EBITDA from the Delaware
Basin JV, which was formed in
August 2016, Marathon Petroleum's
50% share of adjusted EBITDA from
the Ascension JV, which began
operations in April 2017, and
other minor non-controlling
interests.
(5) Represents transaction costs
attributable to ENLC's share of
the acquisition of EnLink
Oklahoma T.O. for the three and
six months ended June 30, 2016
and other non-cash items not
included in cash available for
distribution.
EnLink Midstream Partners, LP
Revised Full-Year EBITDA Guidance (1) (2)
(All amounts in millions except per unit amounts)
(Unaudited)
Year Ended December 31, 2017
Previously-Reported Guidance Revised Guidance
Low Mid-Point High Low Mid-point High
--- --------- ---- --- --------- ----
Net income (1) $80 $100 $120 $116 $132 $148
Interest expense, net of
interest income 176 176 176 188 188 188
Depreciation and amortization 570 580 590 538 544 550
Impairments - - - 7 7 7 7
Income from unconsolidated
affiliates (7) (9) (11) (7) (8) (9)
Distributions from
unconsolidated affiliates 5 10 15 11 12 13
(Gain) loss on disposition of
assets - - - - - -
Gain on extinguishment of debt - - - (9) (9) (9)
Unit-based compensation 40 43 46 47 47 47
Income tax provision 5 5 5 2 2 2
Gain on non-cash derivatives - - - (7) (7) (7)
Payments under onerous
performance obligation offset
to other current and long-
term liabilities (18) (18) (18) (18) (18) (18)
Other (3) 4 4 4 5 5 5
--- --- --- --- --- ---
Adjusted EBITDA before non-
controlling interest $855 $891 $927 $873 $895 $917
Non-controlling interest
share of adjusted EBITDA (4) (40) (41) (42) (33) (35) (37)
Adjusted EBITDA, net to EnLink
Midstream Partners, LP $815 $850 $885 $840 $860 $880
==== ==== ==== ==== ==== ====
(1) The revised forward-looking net
income guidance for the year ended
December 31, 2017 includes the
actual results for the six months
ended June 30, 2017 and the
projected results for the second
half of the year ended December 31,
2017. The forward-looking net
income guidance for the second half
of the year ended December 31, 2017
excludes the potential impacts of
gains or losses on derivative
activity, gains or losses on
disposition of assets, impairment
expense, gains or losses as a result
of legal settlements, gains or
losses on extinguishment of debt,
and the financial effects of future
acquisitions. The exclusion of these
items is due to the uncertainty
regarding the occurrence, timing
and/or amount of these events.
(2) We do not provide a reconciliation of
forward-looking Adjusted EBITDA to
Net Cash Provided by Operating
Activities because we are unable to
predict with reasonable certainty
changes in working capital, which
may impact cash provided or used
during the year. Working capital
includes accounts receivable,
accounts payable and other current
assets and liabilities. These items
are uncertain and depend on various
factors outside the companies'
control.
(3) Includes the following: non-cash
rent, which relates to lease
incentives pro-rated over the lease
term, gains and losses on settled
interest rate swaps designated as
hedges related to debt issuances,
which are recorded in other
comprehensive income (loss), and
reimbursed employee costs from Devon
and LPC, which are costs reimbursed
to us by previous employers pursuant
to acquisition or merger.
(4) Non-controlling interest share of
adjusted EBITDA includes ENLC's 16%
share of adjusted EBITDA from EnLink
Oklahoma T.O., NGP Natural Resources
XI, L.P.'s ("NGP") 49.9% share of
adjusted EBITDA from the Delaware
Basin JV, which was formed in August
2016, Marathon Petroleum's 50% share
of adjusted EBITDA from the
Ascension JV, which began operations
in April 2017, and other minor non-
controlling interests.
Investor Relations: Kate Walsh, Vice President of Investor Relations, 214-721-9696, kate.walsh@enlink.com
Media Relations: Jill McMillan, Vice President of Public & Industry Affairs, 214-721-9271, jill.mcmillan@enlink.com
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SOURCE EnLink Midstream
