EnLink Midstream Reports Third Quarter 2017 Results, Announces Gas Processing Expansions
DALLAS, Oct. 31, 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 financial results for the third quarter of 2017, announced gas processing expansions, and provided management and regional updates.
Highlights
-- ENLK reported net income of $28.7 million and net income attributable to
ENLK after non-controlling interest of $25.5 million for the quarter
ended September 30, 2017. ENLK achieved $216.8 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."
-- ENLC reported net income of $24.1 million and net income attributable to
ENLC after non-controlling interest of $6.2 million for the quarter
ended September 30, 2017. ENLC achieved $54.8 million of cash available
for distribution for the same period. Cash available for distribution
is a non-GAAP measure and is explained in greater detail under "Non-GAAP
Financial Information."
-- EnLink's Oklahoma segment experienced strong volume growth during the
third quarter of 2017, with gas gathering and transmission volumes up 16
percent and processing volumes up 19 percent from the second quarter of
2017. EnLink's Oklahoma gas gathering and transmission volumes
increased by 42 percent and processing volumes increased by 53 percent
from the third quarter of 2016. Volume growth in Central Oklahoma is
expected to remain robust as Devon Energy Corp. and other active
producer customers on EnLink's dedicated acreage continue to deliver
strong well results and transition to full-field development targeting
multiple producing horizons, especially in the STACK.
-- EnLink announced plans to construct a new 200 million cubic feet per day
(MMcf/d) processing plant, known as the Thunderbird plant, in Central
Oklahoma. The new Thunderbird plant is expected to be operational
during first quarter of 2019.
-- EnLink's Permian Basin operations experienced continued volume growth
during the third quarter of 2017, with both gas gathering and
transmission and processing volumes increasing 13 percent from the
second quarter of 2017. EnLink's Permian gas gathering and transmission
volumes increased by 51 percent and processing volumes increased by 44
percent from the third quarter of 2016.
-- EnLink's Delaware Basin Joint Venture (JV) announced the construction of
Lobo III, a new 200 MMcf/d expansion of gas processing capacity at the
JV's existing Lobo complex. The expansion is expected to be operational
during the second half of 2018. Gas gathering volumes on the JV's
footprint have increased by 365 percent year-over-year, and rig activity
remains strong with approximately 16 rigs running on the JV's capture
area.
-- Impacts from Hurricane Harvey on EnLink's assets, finances and
operations were immaterial, and no significant one-time items impacted
volumes or financial results for the third quarter of 2017.
"EnLink continues to execute on our long-term strategic growth plan while delivering solid quarterly financial results," said Barry E. Davis, EnLink Chairman and Chief Executive Officer. "Operating in the right places with the right partners has enabled us to develop an opportunity-rich inventory of projects, highlighted by our latest announcements of processing capacity expansions in both Oklahoma and the Delaware Basin. We are experiencing strong volume momentum across our core growth areas and expect this pace to continue. Financially, we have increased focus on maintaining a strong balance sheet, building near-term distribution coverage, and growing distributions over the long-term."
EnLink Midstream Partners, LP: Third Quarter 2017 Financial Results
-- The Partnership reported net income attributable to ENLK of $25.5
million for the third quarter of 2017, compared to net income of $18.8
million for the third quarter of 2016.
-- The Partnership achieved $216.8 million of adjusted EBITDA net to ENLK
for the third quarter of 2017, compared to $197.5 million for the third
quarter of 2016.
-- The Partnership reported net cash provided by operating activities of
$200.8 million for the third quarter of 2017, compared to net cash
provided by operating activities of $209.6 million for the third quarter
of 2016.
-- Distributable cash flow attributable to ENLK's common units was $150.1
million for the third quarter of 2017, as compared to $154.4 million for
the third quarter of 2016. Beginning in the third quarter of 2017,
ENLK's Series B preferred units moved to 7.5 percent cash pay, with a
variable percentage of paid-in-kind units.
-- ENLK reaffirmed full-year 2017 net income guidance range of $116 million
to $148 million. ENLK also reaffirmed full-year 2017 adjusted EBITDA
guidance range of $840 million to $880 million, and the company expects
to achieve full-year adjusted EBITDA around the mid-point of its
guidance range. ENLK also reaffirmed its annualized fourth quarter of
2017 adjusted EBITDA guidance range of $925 million to $950 million.
-- Growth capital expenditures net to ENLK for the third quarter of 2017
totaled approximately $130 million. Growth capital expenditures
year-to-date totaled approximately $510 million net to ENLK. Full-year
2017 growth capital expenditure guidance net to ENLK remains unchanged
at a range of $505 million to $645 million. Growth capital expenditures
net to ENLK associated with Lobo III and Thunderbird gas processing
expansions are expected to be approximately $25 million during 2017.
Growth capital expenditures do not include capitalized interest.
-- ENLK completed a successful $400 million offering of its 6.000 percent
Series C Fixed-to-Floating Rate Cumulative Redeemable Perpetual
Preferred units during the third quarter of 2017. Net proceeds raised
will be used to fund growth capital expenditures and for general
partnership purposes.
-- As of October 26, 2017, ENLK had 349,008,666 common units outstanding.
EnLink Midstream, LLC: Third Quarter 2017 Financial Results
-- The General Partner reported net income of $24.1 million for the third
quarter of 2017, compared to net income of $11.1 million in the third
quarter of 2016.
-- Cash available for distribution was $54.8 million for the third quarter
of 2017, compared to $51.1 million in the third quarter of 2016.
Included in cash available for distribution for the third quarter of
2017 was $6.9 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 third quarter of 2017
totaled approximately $15 million. Year-to-date through September 30,
2017, growth capital expenditures totaled approximately $56 million.
Full-year 2017 growth capital expenditure guidance net to ENLC remains
unchanged at a range of $60 million to $70 million. Growth capital
expenditures do not include capitalized interest.
-- As of October 26, 2017, ENLC had 180,589,927 common units outstanding.
Senior Management Update:
-- EnLink is pleased to announce Dean Mueller's promotion to Senior Vice
President of Operations in Oklahoma and North Texas. In his new role,
Dean will focus on growing and sustaining strong businesses in EnLink's
core growth area of Central Oklahoma and in the company's anchor
position in North Texas.
-- EnLink recently announced Cynthia L. Jaggi's appointment to Senior Vice
President of Strategic Process Transformation. In her new role, Cindy
manages the new Strategic Process Transformation team, which EnLink
created to lead and enhance business performance.
Regional Updates:
Central Oklahoma:
-- EnLink's Oklahoma segment experienced strong volume growth during the
third quarter of 2017, with gas gathering and transmission volumes up 16
percent and processing volumes up 19 percent from the second quarter of
2017. Gas gathering and transmission volumes are up 42 percent and
processing volumes are up 53 percent from the third quarter of 2016.
-- Rig activity remained robust during the third quarter of 2017, with
approximately 27 active rigs currently operating on EnLink's dedicated
acreage in Central Oklahoma. EnLink exited the second quarter of 2017
with approximately 24 active rigs on dedicated acreage.
-- Volume growth is projected to remain strong on EnLink's Central Oklahoma
footprint as Devon and other active producer customers continue to
deliver strong well results and transition to full-field development.
Several large-scale development projects are scheduled to start over the
next 12 to 18 months, securing volume momentum for EnLink.
-- EnLink announced plans to construct a new 200 MMcf/d processing plant in
Central Oklahoma. The new Thunderbird facility is expected to be
operational during the first quarter of 2019.
-- EnLink's previously announced expansion of its Chisholm complex is
progressing on-budget, is nearing completion, and remains on track to be
operational by year-end 2017. Once operational, Chisholm III will
increase EnLink's gas processing capacity in Central Oklahoma by 200
MMcf/d, and total gas processing capacity will reach 1 billion cubic
feet per day (Bcf/d) in the region, solidifying EnLink's position as one
of the largest and most cost-efficient providers of gas processing in
the area.
-- The construction of EnLink's previously announced Black Coyote crude oil
gathering system is progressing well, and is expected to be completed
during the first quarter of 2018. Once the Black Coyote system is
operational, EnLink will generate revenue by servicing a range of
products produced by Devon's multi-zone Showboat development, including
natural gas, condensate, natural gas liquids (NGL) and crude oil.
Midland Basin:
-- EnLink's Midland Basin operations continue to benefit from increasing
activity levels across its acreage as producer customers further invest
in drilling programs and transition to large-scale development projects.
Natural gas volume growth is expected to remain steady, driven by the
completion of several multi-well pad developments over the next few
months and into 2018.
-- EnLink's Midland Basin natural gas assets are currently running at
approximately 56 percent utilization, and have capacity to handle
incremental production with minimal additional growth capital
expenditures. EnLink also has the infrastructure in place to cost
effectively expand the Riptide gas processing facility by an additional
100 MMcf/d as system volumes continue to increase.
-- During the third quarter of 2017, EnLink bolstered its position in the
Midland Basin by adding an acreage dedication with Parsley Energy Inc.
to its customer portfolio and extending supply agreements with a number
of key producer customers.
Delaware Basin
-- Given continued volume growth on its Delaware Basin footprint, EnLink's
Delaware Basin JV announced the construction of Lobo III, a new 200
MMcf/d expansion of gas processing capacity at the JV's existing Lobo
complex. The facility is expected to be operational during the second
half of 2018. For 2017, growth capital expenditures associated with the
Lobo III expansion are forecasted to be approximately $10 million net to
ENLK.
Louisiana:
-- EnLink's NGL network continued to benefit from growth in liquids output
from the Chisholm II plant during the third quarter of 2017. NGL
volumes on EnLink's system were consistent sequentially, as the second
quarter of 2017 benefited from operational impacts related to Mont
Belvieu area maintenance.
-- EnLink continued to experience increased volumes on its Louisiana gas
system during the third quarter of 2017, driven by strong demand across
its network. Throughput on EnLink's Louisiana gas system for the third
quarter of 2017 exceeded on average 2 Bcf/d, a 4 percent increase as
compared to the second quarter of 2017 and a 15 percent increase as
compared to the third quarter of 2016.
North Texas:
-- 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. Devon recently announced
that, due to the success of the refrac pilot, it plans to expand the
refrac program by an additional six wells in the fourth quarter of 2017.
Devon's capital investments also include the initiation of a new
rig-line drilling pilot of six wells during September of 2017, with
results expected by year-end 2017.
-- 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.
Third Quarter 2017 Earnings Call Details
The General Partner and the Partnership will hold a conference call to discuss third quarter 2017 financial results on Wednesday, November 1, 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/10112090 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 available to common unitholders ("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, accrued cash distributions on Series B Preferred Units and Series C Preferred Units paid or expected to be paid, and maintenance capital expenditures, excluding maintenance capital expenditures that were contributed by other entities and relate to the non-controlling interest share of our consolidated entities. 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, the General Partner's acquisition transaction costs attributable to its share of the EnLink Oklahoma T.O. acquisition, and the non-controlling interest share of the Partnership's net income (loss).
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, when additional capacity will be operational, 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 Nine Months Ended
September 30, September 30,
2017 2016 2017 2016
---- ---- ---- ----
Total revenues $1,397.9 $1,104.6 $3,983.4 $3,027.5
Cost of sales (1) 1,053.2 788.2 2,987.9 2,106.8
------- ----- ------- -------
Gross operating margin 344.7 316.4 995.5 920.7
Operating costs and expenses:
Operating expenses 102.1 98.0 308.8 296.3
General and
administrative 30.0 28.3 94.6 90.6
(Gain) loss on
disposition of assets 1.1 (3.0) 0.8 (2.9)
Depreciation and
amortization 136.3 126.2 407.1 373.0
Impairments 1.8 - 8.8 566.3
Gain on litigation
settlement - - (26.0) -
--- --- ----- ---
Total operating costs
and expenses 271.3 249.5 794.1 1,323.3
----- ----- ----- -------
Operating income (loss) 73.4 66.9 201.4 (402.6)
Other income (expense):
Interest expense, net of
interest income (48.9) (48.0) (140.5) (137.9)
Gain on extinguishment
of debt - - 9.0 -
Income (loss) from
unconsolidated
affiliates 4.4 1.1 5.0 (0.5)
Other income 0.3 0.1 0.5 0.1
--- --- --- ---
Total other expense (44.2) (46.8) (126.0) (138.3)
----- ----- ------ ------
Income (loss) before
non-controlling
interest and income
taxes 29.2 20.1 75.4 (540.9)
Income tax provision (0.5) (2.6) (0.7) (1.3)
---- ----
Net income (loss) 28.7 17.5 74.7 (542.2)
Net income (loss)
attributable to non-
controlling interest 3.2 (1.3) 1.5 (5.6)
--- ---- --- ----
Net income (loss)
attributable to EnLink
Midstream Partners, LP $25.5 $18.8 $73.2 $(536.6)
===== ===== ===== =======
General partner interest
in net income $10.6 $10.8 $27.3 $28.8
===== ===== ===== =====
Limited partners'
interest in net loss
attributable to EnLink
Midstream Partners, LP $(8.6) $(11.4) $(18.4) $(602.1)
===== ====== =======
Class C partners'
interest in net loss
attributable to EnLink
Midstream Partners, LP $ - $ - $ - $(12.5)
=== === === === === === ======
Series B preferred
interest in net income
attributable to EnLink
Midstream Partners, LP $22.8 $19.4 $63.6 $49.2
===== ===== ===== =====
Series C preferred
interest in net income
attributable to EnLink
Midstream Partners, LP $0.7 $ - $0.7 $ -
==== === === ==== === ===
Net loss attributable to EnLink Midstream
Partners, LP per limited partners' unit:
Basic common unit $(0.02) $(0.03) $(0.05) $(1.82)
====== ====== ====== ======
Diluted common unit $(0.02) $(0.03) $(0.05) $(1.82)
====== ====== ====== ======
(1) Includes related party cost of sales
of $47.3 million and $33.7 million
for the three months ended September
30, 2017 and 2016, respectively, and
$126.9 million and $126.0 million
for the nine months ended September
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 Nine Months Ended
September 30, September 30,
2017 2016 2017 2016
---- ---- ---- ----
Net income (loss) $28.7 $17.5 $74.7 $(542.2)
Interest expense, net
of interest income 48.9 48.0 140.5 137.9
Depreciation and
amortization 136.3 126.2 407.1 373.0
Impairments 1.8 - 8.8 566.3
(Income) loss from
unconsolidated
affiliates (1) (4.4) (1.1) (5.0) 0.5
Distribution from
unconsolidated
affiliates (2) 4.0 4.7 11.4 19.6
(Gain) loss on
disposition of assets 1.1 (3.0) 0.8 (2.9)
Gain on extinguishment
of debt - - (9.0) -
Unit-based
compensation 10.1 7.3 38.7 22.5
Income tax provision 0.5 2.6 0.7 1.3
(Gain) loss on non-
cash derivatives 3.3 1.6 (3.8) 16.0
Payments under onerous
performance
obligation offset to
other current and
long-term
liabilities (4.5) (4.5) (13.5) (13.5)
Other (3) 0.8 1.5 3.5 7.5
--- --- --- ---
Adjusted EBITDA before
non-controlling
interest $226.6 $200.8 $654.9 $586.0
Non-controlling
interest share of
adjusted EBITDA (4) (9.8) (3.3) (20.8) (6.1)
---- ---- ----- ----
Adjusted EBITDA, net
to EnLink Midstream
Partners, LP $216.8 $197.5 $634.1 $579.9
------ ------ ------ ------
Interest expense, net
of interest income (48.9) (48.0) (140.5) (137.9)
Amortization of EnLink
Oklahoma T.O.
installment payable
discount included in
interest expense (5) 6.4 13.3 19.9 39.0
Litigation settlement
adjustment (6) - - (18.1) -
Non-cash adjustment
for redeemable non-
controlling interest - - - 0.3
Interest Rate Swap (7) - 0.4 - 0.4
Current taxes and
other (0.7) (2.6) (0.9) (1.6)
Maintenance capital
expenditures, net to
EnLink Midstream
Partners, LP (8) (6.9) (6.2) (20.5) (19.3)
Preferred unit accrued
cash distributions
(9) (16.6) - (16.6) -
Distributable cash
flow $150.1 $154.4 $457.4 $460.8
====== ====== ====== ======
Actual declared
distribution $152.2 $148.7 $455.5 $437.7
Distribution Coverage 0.99x 1.04x 1.00x 1.05x
Distributions declared
per limited partner
unit $0.39 $0.39 $1.17 $1.17
(1) Includes a loss of $3.4 million for
the nine months ended September 30,
2017 from the sale of our HEP
interests.
(2) Distributions for the three and nine
months ended September 30, 2016 do
not include $32.7 million of
distributions received from HEP
during the third quarter of 2016
attributable to the redemption of
preferred units. The preferred units
were issued to us by HEP during the
second and third quarters of 2016
for contributions of $29.5 million
and $3.2 million, respectively.
(3) Includes 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.
(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.
(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.
(7) During the third quarter of 2016, we
entered into an interest rate swap
arrangement that was not designated
as a cash flow hedge to mitigate our
exposure to interest rate movements
prior to our note issuances. The
gain on settlement of the interest
rate swaps was considered excess
proceeds for the note issuance and
is therefore excluded from
distributable cash flow.
(8) Excludes maintenance capital
expenditures that were contributed
by other entities and relate to the
non-controlling interest share of
our consolidated entities.
(9) Represents the cash distributions
earned by the Series B Preferred
Units of $15.9 million for the three
and nine months ended September 30,
2017 and $0.7 million earned by the
Series C Preferred Units for the
three and nine months ended
September 30, 2017, assuming a
distribution is declared by our
Board of Directors. Cash
distributions to be paid to holders
of the Series B Preferred Units and
Series C Preferred Units are not
available to common unitholders.
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 Nine Months Ended
September 30, September 30,
2017 2016 2017 2016
---- ---- ---- ----
Net cash provided by
operating activities $200.8 $209.6 $533.0 $509.2
Interest expense, net
(1) 41.5 34.5 118.9 98.7
Current income tax 0.7 2.6 0.9 1.6
Distributions from
unconsolidated
affiliate investment
in excess of earnings
(2) (0.1) 4.1 7.3 18.9
Other (3) (1.7) 1.0 4.0 6.3
Changes in operating assets and
liabilities which (provided) used
cash:
Accounts receivable,
accrued revenues,
inventories and other 127.5 (0.2) 105.5 14.2
Accounts payable,
accrued gas and crude
oil purchases and
other (4) (142.1) (50.8) (114.7) (62.9)
Adjusted EBITDA before
non-controlling
interest $226.6 $200.8 $654.9 $586.0
Non-controlling
interest share of
adjusted EBITDA (5) (9.8) (3.3) (20.8) (6.1)
Adjusted EBITDA, net
to EnLink Midstream
Partners, LP $216.8 $197.5 $634.1 $579.9
------ ------ ------ ------
Interest expense, net
of interest income (48.9) (48.0) (140.5) (137.9)
Amortization of EnLink
Oklahoma T.O.
installment payable
discount included in
interest expense (6) 6.4 13.3 19.9 39.0
Litigation settlement
adjustment (7) - - (18.1) -
Non-cash adjustment
for redeemable non-
controlling interest - - - 0.3
Interest Rate Swap (8) - 0.4 - 0.4
Current taxes and
other (0.7) (2.6) (0.9) (1.6)
Maintenance capital
expenditures, net to
EnLink Midstream
Partners, LP (9) (6.9) (6.2) (20.5) (19.3)
Preferred unit accrued
cash distributions
(10) (16.6) - (16.6) -
Distributable cash
flow $150.1 $154.4 $457.4 $460.8
====== ====== ====== ======
(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) Distributions for the three and nine
months ended September 30, 2016 do
not include $32.7 million of
distributions received from HEP
during the third quarter of 2016
attributable to the redemption of
preferred units. The preferred units
were issued to us by HEP during the
second and third quarters of 2016
for contributions of $29.5 million
and $3.2 million, respectively.
(3) Includes 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.
(4) Net of payments under onerous
performance obligation offset to
other current and long-term
liabilities.
(5) 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.
(6) 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.
(7) Represents recoveries from litigation
settlement for amounts not
previously deducted from
distributable cash flow.
(8) During the third quarter of 2016, we
entered into an interest rate swap
arrangement that was not designated
as a cash flow hedge to mitigate our
exposure to interest rate movements
prior to our note issuances. The
gain on settlement of the interest
rate swaps was considered excess
proceeds for the note issuance and
is therefore excluded from
distributable cash flow.
(9) Excludes maintenance capital
expenditures that were contributed
by other entities and relate to the
non-controlling interest share of
our consolidated entities.
(10) Represents the cash distributions
earned by the Series B Preferred
Units of $15.9 million for the three
and nine months ended September 30,
2017 and $0.7 million earned by the
Series C Preferred Units for the
three and nine months ended
September 30, 2017, assuming a
distribution is declared by our
Board of Directors. Cash
distributions to be paid to holders
of the Series B Preferred Units and
Series C Preferred Units are not
available to common unitholders.
EnLink Midstream Partners, LP
Operating Data
(Unaudited)
Three Months Ended Nine Months Ended
September 30, September 30,
2017 2016 2017 2016
---- ---- ---- ----
Midstream Volumes:
Texas
Gathering and
Transportation
(MMBtu/d) (1) 2,251,700 2,579,500 2,265,900 2,657,600
Processing (MMBtu/d) 1,194,300 1,172,200 1,178,800 1,188,100
Louisiana
Gathering and
Transportation
(MMBtu/d) 2,009,300 1,754,400 1,960,300 1,602,400
Processing (MMBtu/d) 443,400 487,900 452,500 496,400
NGL Fractionation
(Gals/d) 5,814,800 5,259,400 5,630,600 5,194,700
Oklahoma
Gathering and
Transportation
(MMBtu/d) 889,200 624,500 787,400 620,300
Processing (MMBtu/d) 872,200 570,100 753,500 571,800
Crude and Condensate
Crude Oil Handling
(Bbls/d) 95,700 72,800 104,500 98,300
Brine Disposal (Bbls/
d) 4,800 3,700 4,700 3,500
(1) Gathering and transportation volumes
in Texas for the three and nine
months ended September 30, 2016
included 247,000 MMBtu/d and
265,000 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 Nine Months Ended
September 30, September 30,
2017 2016 2017 2016
---- ---- ---- ----
Total revenues $1,397.9 $1,104.6 $3,983.4 $3,027.5
Cost of sales (1) 1,053.2 788.2 2,987.9 2,106.8
------- ----- ------- -------
Gross operating margin 344.7 316.4 995.5 920.7
Operating costs and expenses:
Operating expenses 102.1 98.0 308.8 296.3
General and administrative 31.3 29.3 98.5 94.7
(Gain) loss on disposition of
assets 1.1 (3.0) 0.8 (2.9)
Depreciation and amortization 136.3 126.2 407.1 373.0
Impairments 1.8 - 8.8 873.3
Gain on litigation settlement - - (26.0) -
--- --- ----- ---
Total operating costs and expenses 272.6 250.5 798.0 1,634.4
----- ----- ----- -------
Operating income (loss) 72.1 65.9 197.5 (713.7)
Other income (expense):
Interest expense, net of interest
income (49.6) (48.4) (142.2) (138.9)
Gain on extinguishment of debt - - 9.0 -
Income (loss) from unconsolidated
affiliates 4.4 1.1 5.0 (0.5)
Other income 0.3 0.1 0.5 0.1
--- --- --- ---
Total other expense (44.9) (47.2) (127.7) (139.3)
----- ----- ------ ------
Income (loss) before non-
controlling interest and income
taxes 27.2 18.7 69.8 (853.0)
Income tax provision (3.1) (7.6) (9.3) (6.0)
---- ---- ---- ----
Net income (loss) 24.1 11.1 60.5 (859.0)
Net income (loss) attributable to
non-controlling interest 17.9 10.4 50.3 (402.9)
---- ---- ---- ------
Net income (loss) attributable to
EnLink Midstream, LLC $6.2 $0.7 $10.2 $(456.1)
==== ==== ===== =======
Net income (loss) attributable to EnLink Midstream,
LLC per unit:
Basic common unit $0.03 $ - $0.06 $(2.54)
----- --- --- ----- ------
Diluted common unit $0.03 $ - $0.06 $(2.54)
===== === === ===== ======
(1) Includes related party cost of sales
of $47.3 million and $33.7 million
for the three months ended September
30, 2017 and 2016, respectively, and
$126.9 million and $126.0 million
for the nine months ended September
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 Nine Months Ended
September 30, September 30,
2017 2016 2017 2016
---- ---- ---- ----
Distribution declared by ENLK
associated with (1):
General partner
interest $0.6 $0.5 $1.9 $1.6
Incentive
distribution rights 14.8 14.4 44.1 42.4
ENLK common units
owned 34.5 34.6 103.6 103.6
---- ---- ----- -----
Total share of ENLK
distributions
declared $49.9 $49.5 $149.6 $147.6
Adjusted EBITDA of
EnLink Oklahoma T.O.
(2) 6.9 2.9 14.6 5.9
Transaction costs (3) - - - 0.6
--- ---
Total cash available $56.8 $52.4 $164.2 $154.1
----- ----- ------ ------
Uses of cash:
General and
administrative
expenses (1.1) (0.9) (3.7) (3.8)
Current income taxes
(4) (0.1) - (0.3) -
Interest expense (0.7) (0.4) (1.7) (1.0)
Maintenance capital
expenditures (5) (0.1) - (0.1) -
Total cash used $(2.0) $(1.3) $(5.8) $(4.8)
ENLC cash available
for distribution $54.8 $51.1 $158.4 $149.3
===== ===== ====== ======
Distribution declared
per ENLC unit $0.255 $0.255 $0.765 $0.765
Cash distribution
declared $46.7 $46.4 $139.9 $139.4
Distribution coverage 1.17x 1.10x 1.13x 1.07x
(1) Represents distributions to be paid
to ENLC on November 13, 2017 and
distributions paid on August 11,
2017, May 12, 2017, November 11,
2016, 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.
(5) Represents ENLC's interest in
EnLink Oklahoma T.O.s' maintenance
capital expenditures which is
netted against the monthly
disbursement of EnLink Oklahoma
T.O.s' adjusted EBITDA per (2)
above.
EnLink Midstream, LLC
Reconciliation of Net Income (Loss) of ENLC to ENLC Cash Available for Distribution
(All amounts in millions)
(Unaudited)
Three Months Ended Nine Months Ended
September 30, September 30,
2017 2016 2017 2016
---- ---- ---- ----
Net income (loss)
of ENLC $24.1 $11.1 $60.5 $(859.0)
Less: Net income
(loss)
attributable to
ENLK 25.5 18.8 73.2 (536.6)
Net loss of ENLC
excluding ENLK $(1.4) $(7.7) $(12.7) $(322.4)
ENLC's share of
distributions
from ENLK (1) 49.9 49.4 149.6 147.5
ENLC's interest
in EnLink
Oklahoma T.O.'s
non-cash
expenses (2) 4.6 3.6 12.8 10.4
ENLC deferred
income tax
expense (3) 2.5 5.0 8.3 4.7
ENLC corporate
goodwill
impairment - - - 307.0
Non-controlling
interest share
of ENLK's net
income (loss)
(4) (0.9) 0.6 0.3 1.1
Other items (5) 0.1 0.2 0.1 1.0
--- --- --- ---
ENLC cash
available for
distribution $54.8 $51.1 $158.4 $149.3
===== ===== ====== ======
(1) Represents distributions declared by
ENLK and to be paid to ENLC on
November 13, 2017 and distributions
paid by ENLK to ENLC on August 11,
2017, May 12, 2017, November 11,
2016, 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 nine months ended September 30,
2017, and depreciation and
amortization for the three and nine
months ended September 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 nine months ended
September 30, 2016, ENLC's interest
in EnLink Oklahoma T.O.s'
maintenance capital expenditures
(which is netted against the monthly
disbursement of EnLink Oklahoma
T.O.s' adjusted EBITDA) for the
three and nine months ended
September 30, 2017 and other non-
cash items not included in cash
available for distribution.
EnLink Midstream Partners, LP
Forward-Looking Reconciliation of Net Income to Full-Year Adjusted EBITDA Guidance (1) (2)
(All amounts in millions)
(Unaudited)
Year Ended December 31, 2017
----------------------------
Low Mid-point High
--- --------- ----
Net income (1) $116 $132 $148
Interest expense, net of
interest income 188 188 188
Depreciation and amortization 538 544 550
Impairments 7 7 7
Income from unconsolidated
affiliates (7) (8) (9)
Distributions from
unconsolidated affiliates 11 12 13
(Gain) loss on disposition of
assets - - -
Gain on extinguishment of debt (9) (9) (9)
Unit-based compensation 47 47 47
Income tax provision 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)
Other (3) 5 5 5
--- --- ---
Adjusted EBITDA before non-
controlling interest $873 $895 $917
Non-controlling interest share
of adjusted EBITDA (4) (33) (35) (37)
Adjusted EBITDA, net to EnLink
Midstream Partners, LP $840 $860 $880
==== ==== ====
(1) The forward-looking net income
guidance 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 Net Cash Provided
by Operating Activities to Adjusted
EBITDA 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 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
View original content with multimedia:http://www.prnewswire.com/news-releases/enlink-midstream-reports-third-quarter-2017-results-announces-gas-processing-expansions-300546839.html
SOURCE EnLink Midstream
