EnLink Midstream Reports Second Quarter 2018 Results and Increases 2018 Guidance
DALLAS, July 31, 2018 /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 second quarter of 2018 and increased certain full-year 2018 guidance measures.
Highlights
-- ENLK reported net income attributable to ENLK after non-controlling
interest of approximately $99 million for the second quarter of 2018,
compared to approximately $30 million for the second quarter of 2017,
representing approximately 230 percent growth.
-- ENLK achieved approximately $257 million of adjusted EBITDA net to ENLK
for the second quarter of 2018, compared to approximately $210 million
for the second quarter of 2017, representing approximately 23 percent
growth. Adjusted EBITDA is a non-GAAP measure and is explained in
greater detail under "Non-GAAP Financial Information."
-- ENLC reported net income attributable to ENLC after non-controlling
interest of approximately $28 million for the second quarter of 2018,
compared to approximately $6 million for the second quarter of 2017,
representing approximately 367 percent growth.
-- ENLC achieved approximately $58 million of cash available for
distribution for the second quarter of 2018, compared to approximately
$53 million for the second quarter of 2017, representing approximately
10 percent growth. Cash available for distribution is a non-GAAP
measure and is explained in greater detail under "Non-GAAP Financial
Information."
-- EnLink's strong financial and operational results for the first half of
2018 were primarily driven by continued growth across EnLink's Central
Oklahoma footprint. Average gas gathering and transportation volumes in
Oklahoma increased by approximately 18 percent from the first quarter of
2018 and 61 percent from the second quarter of 2017. Average processing
volumes increased approximately 12 percent from the first quarter of
2018 and 64 percent from the second quarter of 2017.
-- ENLK raised its full-year 2018 net income and adjusted EBITDA guidance.
The increased net income guidance range for 2018 is $329 million to $369
million, representing an approximate 22 percent increase to the previous
guidance mid-point. The increased adjusted EBITDA guidance range for
2018 is now $1.0 billion to $1.05 billion, representing an approximate 4
percent increase to the previous guidance mid-point. ENLK continues to
expect 2019 adjusted EBITDA growth between five percent to 10 percent
above the increased 2018 mid-point.
-- ENLK raised its full-year 2018 distributable cash flow guidance range to
$680 million to $710 million, representing an approximate 6 percent
increase to the previous guidance mid-point. Distributable cash flow is
a non-GAAP measure and is explained in greater detail under "Non-GAAP
Financial Information."
-- ENLK raised its full-year 2018 growth capital expenditures, to a
mid-point of $720 million, which is up from the previous mid-point of
approximately $650 million. The expected increase in growth capital
expenditures is largely related to the construction of crude oil
gathering systems in the Permian Basin and Central Oklahoma, and the
acceleration of well connections across Central Oklahoma.
-- In July 2018, affiliates of Global Infrastructure Partners (GIP), a
leading global independent infrastructure fund manager, completed the
previously announced acquisition of all of Devon's equity interests in
EnLink for total cash consideration of $3.125 billion.
"EnLink has performed tremendously well during the first half of 2018, with our results being driven by strong execution and continued focus on our seven growth strategies." said Michael J. Garberding, EnLink President and Chief Executive Officer. "We are pleased to be in the position to increase guidance, and attribute our solid performance to being in the right places with the right partners. We continue to strengthen our balance sheet and remain committed to running our business with investment grade style credit metrics. We recently announced the addition of a new strategic partner, Global Infrastructure Partners, and are excited to team with GIP to further enhance our go-forward plans and build on our strength and momentum."
EnLink Midstream Partners, LP: Second Quarter 2018 Financial Results
-- The Partnership reported net income attributable to ENLK of $98.9
million for the second quarter of 2018, compared to net income of $29.6
million for the second quarter of 2017.
-- The Partnership achieved $257.2 million of adjusted EBITDA net to ENLK
for the second quarter of 2018, compared to $209.7 million for the
second quarter of 2017.
-- The Partnership reported net cash provided by operating activities of
$238.0 million for the second quarter of 2018, compared to $158.0
million for the second quarter of 2017.
-- Distributable cash flow attributable to ENLK's common units was $178.8
million for the second quarter of 2018, compared to $154.3 million for
the second quarter of 2017.
-- ENLK raised its full-year 2018 guidance, with net income expected in the
range of $329 million to $369 million and adjusted EBITDA expected in
the range of $1.00 billion to $1.05 billion. Accordingly, ENLK updated
its 2019 adjusted EBITDA expectations of five percent to 10 percent
growth over the increased 2018 guidance mid-point. ENLK raised its 2018
distributable cash flow guidance range to $680 million to $710 million.
The change in distributable cash flow guidance range represents an
approximate 6 percent increase from the prior mid-point to the new
mid-point.
-- ENLK's distribution coverage was 1.17x for the second quarter of 2018,
compared to 1.02x for the second quarter of 2017. ENLK's new
distribution coverage range for 2018 is 1.10x to 1.15x for 2018, which
is up from the 1.00x to 1.10x previously disclosed guidance range.
-- Debt to adjusted EBITDA as of June 30, 2018 was 3.82x, compared to 3.99x
as of June 30, 2017 (as calculated by ENLK's bank facility covenants).
Debt to adjusted EBITDA for 2018 is expected to be in the range of 3.85x
to 4.00x, refined from the previously disclosed guidance range of 3.70x
to 4.20x.
-- Growth capital expenditures net to ENLK for the second quarter of 2018
totaled approximately $170 million, which combined with the first
quarter of 2018 expenditures of approximately $138 million, results in
year-to-date growth capital expenditures of approximately $308 million.
EnLink raised its total funded growth capital expenditures to account
for increased activity across EnLink's footprint, including the
continued build-out of crude gathering platforms in the Permian Basin
and Central Oklahoma. The updated range for ENLK is $685 million to
$755 million, up from a previously disclosed range of $580 million to
$710 million. The increase in growth capital expenditures is expected
to be funded by excess cash flow generated by the business and
borrowings on ENLK's credit facility.
-- As of July 26, 2018, ENLK had 350,346,037 common units outstanding.
EnLink Midstream, LLC: Second Quarter 2018 Financial Results
-- The General Partner reported net income attributable to ENLC of $28.0
million for the second quarter of 2018, compared to net income of $5.9
million for the second quarter of 2017.
-- ENLC's cash available for distribution totaled $57.9 million for the
second quarter of 2018, compared to $52.6 million for the second quarter
of 2017. Cash available for distribution for the second quarter of 2018
included $10.3 million related to ENLC's approximately 16 percent
interest in EnLink Oklahoma Gas Processing LP (together with its
subsidiaries, "EOGP").
-- ENLC increased its full-year 2018 net income guidance, with net income
expected in the range of $285 million to $343 million. ENLC reaffirmed
its cash available for distribution guidance range of $230 million to
$240 million.
-- Growth capital expenditures net to ENLC for the second quarter of 2018
totaled approximately $21 million, which combined with the first quarter
of 2018 growth capital expenditures of approximately $12 million,
results in a year-to-date total of approximately $33 million. Full-year
2018 growth capital expenditure net to ENLC has changed to a range of
$40 million to $70 million, as compared to the previously disclosed
range of $50 million to $60 million.
-- ENLC's distribution coverage was 1.18x for the second quarter of 2018,
compared to 1.13x for the second quarter of 2017. ENLC's distribution
coverage for 2018 is expected to remain in-line with the previously
disclosed guidance range of 1.16x to 1.22x.
-- As of July 26, 2018, ENLC had 181,132,896 common units outstanding.
Regional Updates:
Central Oklahoma:
-- EnLink's Oklahoma segment reported strong segment profit growth during
the second quarter of 2018, with segment profit of $151.7 million, up
from $95.4 million reported in the first quarter of 2018 and $68.8
million in the second quarter of 2017. Segment profit for the second
quarter of 2018 included $45.5 million related to a one-time revenue
amount which was recorded as a result of a contract restructuring. This
one-time amount does not impact adjusted EBITDA for the second quarter
of 2018. Omitting this one-time amount from Oklahoma segment profit for
the second quarter of 2018 results in an approximate 11 percent increase
over Oklahoma segment profit for the first quarter of 2018 and an
approximate 54 percent increase from Oklahoma segment profit for the
second quarter of 2017. The pace of growth in the Oklahoma segment
anchors management's confidence in the strength of the STACK play and
the ability to achieve recently raised 2018 full-year guidance.
-- EnLink's Oklahoma segment experienced solid volume growth during the
second quarter of 2018, including average gas gathering and
transportation volume increases of 18 percent and average processing
volume increases of 12 percent, in each case, as compared to the first
quarter of 2018. Average gas gathering and transportation volumes
increased 61 percent and average processing volumes increased
approximately 64 percent, in each case, from the second quarter of 2017.
Volume growth in Central Oklahoma is expected to remain robust as the
diverse group of producer customers on EnLink's dedicated acreage
continues to deliver strong well results and continues the transition to
full-field development.
-- Construction of EnLink's previously announced Thunderbird processing
plant is progressing well and remains on track to be operational during
the first quarter of 2019. Once operational, Thunderbird will increase
EnLink's gas processing capacity in Central Oklahoma by 200 million
cubic feet per day (MMcf/d), bringing total gas processing capacity to
over 1.2 billion cubic feet per day (Bcf/d). EnLink's ongoing
development in the active Central Oklahoma region reinforces its
position as one of the largest and most cost-efficient providers of
natural gas processing in the STACK.
-- EnLink made significant progress in advancing its crude gathering
strategy in Oklahoma during the second quarter of 2018. The Black
Coyote crude gathering system, backed by an acreage dedication from
Devon, was placed in service in April 2018. EnLink expects significant
volume growth on the system during the second half of 2018, driven by
connections of several upcoming multi-well drilling projects. In
addition, construction continued on the Redbud crude gathering system,
underwritten by an acreage dedication from Marathon Oil Company. The
first phase of the Redbud system is expected to be operational during
the third quarter of 2018.
Midland Basin:
-- EnLink's Midland Basin natural gas volume activity experienced solid
growth during the second quarter of 2018, with average gathering and
transportation volumes up 14 percent, and average volumes for processing
activity up 12 percent over the first quarter of 2018. Average gathering
and transportation volumes have increased by approximately 27 percent,
and average processing volumes are up 22 percent from the second quarter
of 2017. This growth trend is expected to continue throughout the
remainder of 2018 and into 2019. EnLink's Midland Basin processing
capacity was approximately 65 percent utilized during the second quarter
of 2018, and utilization rate in the fourth quarter of 2018 is projected
to be approximately 80 percent.
-- EnLink's crude oil gathering operations in the Midland Basin experienced
solid momentum during the quarter, achieving average volumes of
approximately 40,000 barrels per day, which represents nearly 40 percent
growth as compared to the second quarter of 2017.
Delaware Basin:
-- Gas volumes across EnLink's Delaware Basin Joint Venture (JV)
experienced solid growth during the second quarter of 2018, with average
gathering and transportation volumes up approximately 33 percent, and
average processing volumes up approximately 37 percent, as compared to
the first quarter of 2018. Average gathering and transportation volumes
have increased by approximately 118 percent, and average processing
volumes have increased by approximately 132 percent, as compared to the
second quarter of 2017. Rig activity remains strong on the JV's
footprint, and volume growth momentum is expected to continue throughout
the second half of 2018 and into 2019.
-- The JV previously announced the construction of Lobo III, a new 200
MMcf/d expansion of gas processing capacity at the existing Lobo
complex. Construction of Lobo III is progressing, and the first 100
MMcf/d expansion is expected to be operational during the fourth quarter
of 2018. The second 100 MMcf/d expansion is expected to be operational
during the first quarter of 2019.
-- EnLink also previously announced the construction of a new crude oil
gathering system, Avenger. Avenger is expected to significantly expand
EnLink's service offerings in the Delaware Basin, and is backed by a
10-year contract with Devon. EnLink expects to invest approximately $35
million to $40 million of growth capital expenditures during 2018, with
initial volumes already flowing. Avenger is expected to be placed into
full-service during the first quarter of 2019, and is expected to
generate a project-based return of five to six times.
Louisiana:
-- EnLink's natural gas liquids (NGL) network continues to benefit from
growth in liquids output from EnLink's Chisholm processing complex in
the STACK. NGLs produced from EnLink's Chisholm complex are
preferentially shipped to EnLink's Gulf Coast operations for further
transportation, fractionation and downstream value creation. Sequential
average NGL volumes on EnLink's system increased slightly during the
second quarter of 2018, continuing the momentum from a strong first
quarter of 2018. For the remainder of 2018, average NGL volumes
fractionated by EnLink are expected to remain at levels similar to those
experienced in the second quarter of 2018. Segment profit contribution
from EnLink's NGL operations for the second quarter of 2018 declined 23
percent as compared to the first quarter of 2018, in-line with
expectations of normal seasonal patterns associated with this area of
the business.
-- EnLink continued to experience strong volumes on its Louisiana gas
system during the second quarter of 2018, driven by strong industrial
and LNG demand across its Gulf Coast network. Average gathering and
transportation throughput on EnLink's Louisiana gas system exceeded 2
Bcf/d for the second quarter of 2018, reflecting an 8 percent increase
as compared to the second quarter of 2017. Volumes are expected to
remain at the high-end of initial expectations for the second half of
2018.
North Texas
EnLink's operations in the Barnett Shale performed well during the second quarter of 2018, with processing volumes remaining sequentially flat and gathering and transportation volumes declining slightly by approximately 1 percent. Segment profit contribution was up approximately 4 percent during the second quarter of 2018 as compared to the first quarter of 2018. Producer customers on EnLink's footprint are reinvigorating their operational and drilling plans in the Barnett Shale, which is translating into improved volume stability on EnLink's footprint.
Second Quarter 2018 Earnings Call Details
The General Partner and the Partnership will hold a conference call to discuss second quarter 2018 results on Wednesday, August 1, 2018, at 8 a.m. Central Time (9 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/10121414 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 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 EnLink.com for more information on how EnLink connects energy to life.
Non-GAAP Financial Information & Other Definitions
This press release contains non-generally accepted accounting principles financial measures that we refer to as adjusted EBITDA, distributable cash flow available to common unitholders ("distributable cash flow"), and the General Partner's cash available for distribution. We define adjusted EBITDA as net income (loss) plus interest expense, provision (benefit) for income taxes, depreciation and amortization expense, impairments, unit-based compensation, (gain) loss on non-cash derivatives, (gain) loss on disposition of assets, (gain) loss on extinguishment of debt, successful acquisition transaction costs (if any), accretion expense associated with asset retirement obligations, non-cash rent and distributions from unconsolidated affiliate investments less payments under onerous performance obligations, non-controlling interest, (income) loss from unconsolidated affiliate investments and non-cash revenue from contract restructuring. 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 non-distributable cash flows, 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. The General Partner's cash available for distribution is defined as net income (loss) of the General Partner less the net income (loss) attributable to the Partnership, which is consolidated into the General Partner's net income (loss), plus the General Partner's (i) share of distributions from the Partnership, (ii) share of EnLink Oklahoma T.O.'s non-cash expenses, (iii) deferred income tax expense (benefit), (iv) corporate goodwill impairment, if any, and (v) successful acquisition transaction costs, if any, less the General Partner's interest in maintenance capital expenditures of EnLink Oklahoma T.O., and less third-party non-controlling interest share of the Partnership's net income (loss) from consolidated affiliates.
The Partnership's distribution coverage is calculated by dividing distributable cash flow by distributions declared to the General Partner and the common unitholders. The General Partner's distribution coverage is calculated by dividing cash available for distribution by distributions declared 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 generally 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 previously-reported results and a meaningful measure of each 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.
Segment profit (loss) is defined as operating income (loss) plus general and administrative expenses, depreciation and amortization, (gain) loss on disposition of assets, impairments and (gain) loss on litigation settlement. Segment profit (loss) includes non-cash compensation expenses reflected in operating expenses. See "Item 8. Financial Statements and Supplementary Data - Note 15 - Segment Information" in ENLK's Annual Report on Form 10-K for the year ended December 31, 2017, and, when available, "Item 1. Financial Statements - Note 11--Segment Information" in ENLK's Quarterly Report on Form 10-Q for the three months ended June 30, 2018, for further information about segment profit (loss).
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 herein. Therefore, you should not rely on any of these forward-looking statements. All statements, other than statements of historical fact, included in this press release constitute forward-looking statements, including but not limited to statements identified by the words "forecast," "may," "believe," "will," "should," "plan," "predict," "anticipate," "intend," "estimate," and "expect" and similar expressions. Such forward-looking statements include, but are not limited to, statements about guidance, projected or forecasted financial and operating results, timing for completion of construction or expansion projects, future operational results of our customers, results in certain basins, future rig count information, objectives, 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, or cash flows include, without limitation,(a) the dependence on Devon for a substantial portion of the natural gas and crude that we gather, process, and transport, (b) developments that materially and adversely affect Devon or other customers, (c) Devon's ability to compete with us, (d) adverse developments in the midstream business may reduce our ability to make distributions, (e) our vulnerability to having a significant portion of our operations concentrated in the Barnett Shale, (f) GIP's potential conflicts of interest with us and the potential for GIP to favor GIP's own interests to the detriment of the unitholders, (g) GIP's ability to compete with us and the fact that it is not required to offer us the opportunity to acquire additional assets or businesses, (h) a default under GIP's credit facility could result in a change in change in control of us, could adversely affect the price of our common units, and could result in a default under our credit facility, (i) continually competing for crude oil, condensate, natural gas, and NGL supplies and any decrease in the availability of such commodities, (j) decreases in the volumes that we gather, process, fractionate, or transport, (k) construction risks in our major development projects, (l) our ability to receive or renew required permits and other approvals, (m) changes in the availability and cost of capital, including as a result of a change in our credit rating, (n) operating hazards, natural disasters, weather-related issues or delays, casualty losses, and other matters beyond our control, (o) impairments to goodwill, long-lived assets and equity method investments, and (p) 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 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'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.
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
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,
2018 2017 2018 2017
---- ---- ---- ----
Total revenues $1,764.7 $1,263.6 $3,526.4 $2,585.5
Cost of sales 1,325.6 932.4 2,707.1 1,934.7
------- ----- ------- -------
Gross operating margin 439.1 331.2 819.3 650.8
Operating costs and expenses, excluding
cost of sales:
Operating expenses 113.4 102.6 222.6 206.7
General and
administrative 29.1 29.6 55.3 64.6
(Gain) loss on
disposition of assets 1.2 (5.4) 1.3 (0.3)
Depreciation and
amortization 145.3 142.5 283.4 270.8
Impairments - - - 7.0
Gain on litigation
settlement - (8.5) - (26.0)
--- ---- --- -----
Total operating costs
and expenses, excluding
cost of sales 289.0 260.8 562.6 522.8
----- ----- ----- -----
Operating income 150.1 70.4 256.7 128.0
Other income (expense):
Interest expense, net of
interest income (43.7) (47.1) (87.4) (91.6)
Gain on extinguishment
of debt - 9.0 - 9.0
Income (loss) from
unconsolidated
affiliates 4.4 (0.1) 7.4 0.6
Other income - 0.2 0.2 0.2
--- --- --- ---
Total other expense (39.3) (38.0) (79.8) (81.8)
----- ----- ----- -----
Income before non-
controlling interest
and income taxes 110.8 32.4 176.9 46.2
Income tax benefit
(provision) 2.1 0.3 1.1 (0.2)
--- ---
Net income 112.9 32.7 178.0 46.0
Net income (loss)
attributable to non-
controlling interest 14.0 3.1 19.0 (1.7)
---- --- ---- ----
Net income attributable
to ENLK $98.9 $29.6 $159.0 $47.7
===== ===== ====== =====
General partner interest
in net income $11.2 $10.8 $21.8 $16.7
===== ===== ===== =====
Limited partners'
interest in net income
(loss) attributable to
ENLK $58.9 $(0.5) $80.5 $(9.8)
===== ===== =====
Series B preferred
interest in net income
attributable to ENLK $22.8 $19.3 $44.7 $40.8
===== ===== ===== =====
Series C preferred
interest in net income
attributable to ENLK $6.0 $ - $12.0 $ -
==== === === ===== === ===
Net income (loss) attributable to ENLK
per limited partners' unit:
Basic common unit $0.17 $ - $0.23 $(0.03)
===== === === ===== ======
Diluted common unit $0.17 $ - $0.23 $(0.03)
===== === === ===== ======
EnLink Midstream Partners, LP
Reconciliation of Net Income 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,
2018 2017 2018 2017
---- ---- ---- ----
Net income $112.9 $32.7 $178.0 $46.0
Interest expense, net
of interest income 43.7 47.1 87.4 91.6
Depreciation and
amortization 145.3 142.5 283.4 270.8
Impairments - - - 7.0
(Income) loss from
unconsolidated
affiliates (1) (4.4) 0.1 (7.4) (0.6)
Distributions from
unconsolidated
affiliates 5.4 4.5 11.4 7.4
(Gain) loss on
disposition of assets 1.2 (5.4) 1.3 (0.3)
Gain on extinguishment
of debt - (9.0) - (9.0)
Unit-based
compensation 9.5 9.3 14.6 28.6
Income tax provision
(benefit) (2.1) (0.3) (1.1) 0.2
(Gain) loss on non-
cash derivatives 10.5 (1.8) 14.0 (7.1)
Payments under onerous
performance
obligation offset to
other current and
long-term
liabilities (4.5) (4.5) (9.0) (9.0)
Non-cash revenue from
contract
restructuring (2) (45.5) - (45.5) -
Other (3) (0.4) 1.9 0.7 2.7
---- --- --- ---
Adjusted EBITDA before
non-controlling
interest $271.6 $217.1 $527.8 $428.3
Non-controlling
interest share of
adjusted EBITDA (4) (14.4) (7.4) (26.9) (11.0)
----- ---- ----- -----
Adjusted EBITDA, net
to ENLK $257.2 $209.7 $500.9 $417.3
------ ------ ------ ------
Interest expense, net
of interest income (43.7) (47.1) (87.4) (91.6)
Amortization of EOGP
installment payable
discount included in
interest expense (5) - 6.5 0.5 13.5
Litigation settlement
adjustment (6) - (5.8) - (18.1)
Current taxes and
other (0.3) 0.4 (1.2) (0.2)
Maintenance capital
expenditures, net to
ENLK (7) (12.1) (9.4) (18.3) (13.6)
Preferred unit accrued
cash distributions
(8) (22.3) - (44.5) -
Distributable cash
flow $178.8 $154.3 $350.0 $307.3
====== ====== ====== ======
Actual declared
distribution to
common unitholders $153.0 $151.9 $305.9 $303.3
Distribution coverage 1.17x 1.02x 1.14x 1.01x
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) In May 2018, we restructured a
natural gas gathering and
processing contract, and, as a
result, recognized non-cash
revenue representing the
discounted present value of a
secured term loan receivable.
(3) Includes accretion expense
associated with asset retirement
obligations 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
16.1% share of adjusted EBITDA
from EOGP, NGP Natural Resources
XI, L.P.'s ("NGP") 49.9% share of
adjusted EBITDA from the Delaware
Basin JV, Marathon Petroleum
Corporation's 50% share of
adjusted EBITDA from the
Ascension JV, and other minor
non-controlling interests.
(5) Amortization of the EOGP
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 EOGP assets.
(6) Represents recoveries from a
lawsuit settled in 2017 for
amounts not previously deducted
from distributable cash flow.
(7) Excludes maintenance capital
expenditures that were
contributed by other entities and
relate to the non-controlling
interest share of our
consolidated entities.
(8) Represents the cash distributions
earned by the Series B Preferred
Units and Series C Preferred
Units of $16.3 million and $6.0
million, respectively, for the
three months ended June 30, 2018,
and cash distributions earned by
the Series B Preferred Units and
Series C Preferred Units of $32.5
million and $12.0 million,
respectively, for the six months
ended June 30, 2018. 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 Six Months Ended
June 30, June 30,
2018 2017 2018 2017
---- ---- ---- ----
Net cash provided by
operating activities $238.0 $158.0 $430.7 $332.2
Interest expense (1) 43.6 40.1 85.8 77.4
Current income tax (0.3) (0.6) 0.7 0.2
Distributions from
unconsolidated
affiliate investment
in excess of earnings 0.5 4.5 1.9 7.4
Other (2) (1.8) 4.8 - 5.7
Changes in operating assets and
liabilities which (provided) used
cash:
Accounts receivable,
accrued revenues,
inventories and other 31.2 (2.6) 86.8 (22.0)
Accounts payable,
accrued gas and crude
oil purchases and
other (3) (39.6) 12.9 (78.1) 27.4
Adjusted EBITDA before
non-controlling
interest $271.6 $217.1 $527.8 $428.3
Non-controlling
interest share of
adjusted EBITDA (4) (14.4) (7.4) (26.9) (11.0)
Adjusted EBITDA, net
to ENLK $257.2 $209.7 $500.9 $417.3
------ ------ ------ ------
Interest expense, net
of interest income (43.7) (47.1) (87.4) (91.6)
Amortization of EOGP.
installment payable
discount included in
interest expense (5) - 6.5 0.5 13.5
Litigation settlement
adjustment (6) - (5.8) - (18.1)
Current taxes and
other (0.3) 0.4 (1.2) (0.2)
Maintenance capital
expenditures, net to
ENLK (7) (12.1) (9.4) (18.3) (13.6)
Preferred unit accrued
cash distributions
(8) (22.3) - (44.5) -
Distributable cash
flow $178.8 $154.3 $350.0 $307.3
====== ====== ====== ======
(1) Excludes non-cash interest income
and amortization of debt issuance
costs and discount and premium.
(2) Includes non-cash rent, which
relates to lease incentives pro-
rated over the lease term, and
accruals for settled commodity
swap transactions.
(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
EOGP, NGP's 49.9% share of
adjusted EBITDA from the Delaware
Basin JV, Marathon Petroleum
Corporation's 50% share of
adjusted EBITDA from the
Ascension JV, and other minor
non-controlling interests.
(5) Amortization of the EOGP
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 EOGP assets.
(6) Represents recoveries from a
lawsuit settled in 2017 for
amounts not previously deducted
from distributable cash flow.
(7) Excludes maintenance capital
expenditures that were
contributed by other entities and
relate to the non-controlling
interest share of our
consolidated entities.
(8) Represents the cash distributions
earned by the Series B Preferred
Units and Series C Preferred
Units of $16.3 million and $6.0
million, respectively, for the
three months ended June 30, 2018,
and cash distributions earned by
the Series B Preferred Units and
Series C Preferred Units of $32.5
million and $12.0 million,
respectively, for the six months
ended June 30, 2018. 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 Six Months Ended
June 30, June 30,
2018 2017 2018 2017
---- ---- ---- ----
Midstream Volumes:
Texas Segment
Gathering and
Transportation
(MMBtu/d) 2,258,300 2,272,100 2,224,700 2,273,100
Processing (MMBtu/d) 1,283,100 1,179,700 1,238,800 1,170,900
Louisiana Segment
Gathering and
Transportation
(MMBtu/d) 2,094,100 1,939,500 2,158,200 1,935,400
Processing (MMBtu/d) 395,600 446,500 418,600 457,100
NGL Fractionation
(Gals/d) 6,480,100 5,819,600 6,342,400 5,534,100
Oklahoma Segment
Gathering and
Transportation
(MMBtu/d) 1,235,500 765,500 1,142,200 735,600
Processing (MMBtu/d) 1,200,700 733,100 1,135,400 693,200
Crude and Condensate Segment
Crude Oil Handling
(Bbls/d) 148,600 107,600 138,200 109,000
Brine Disposal (Bbls/
d) 3,500 4,800 3,100 4,600
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,
2018 2017 2018 2017
---- ---- ---- ----
Total revenues $1,764.7 $1,263.6 $3,526.4 $2,585.5
Cost of sales 1,325.6 932.4 2,707.1 1,934.7
------- ----- ------- -------
Gross operating margin 439.1 331.2 819.3 650.8
Operating costs and expenses, excluding
cost of sales:
Operating expenses 113.4 102.6 222.6 206.7
General and
administrative 30.4 31.1 57.9 67.2
(Gain) loss on
disposition of assets 1.2 (5.4) 1.3 (0.3)
Depreciation and
amortization 145.3 142.5 283.4 270.8
Impairments - - - 7.0
Gain on litigation
settlement - (8.5) - (26.0)
--- ---- --- -----
Total operating costs
and expenses, excluding
cost of sales 290.3 262.3 565.2 525.4
----- ----- ----- -----
Operating income 148.8 68.9 254.1 125.4
Other income (expense):
Interest expense, net of
interest income (44.6) (47.7) (89.1) (92.6)
Gain on extinguishment
of debt - 9.0 - 9.0
Income (loss) from
unconsolidated
affiliates 4.4 (0.1) 7.4 0.6
Other income (expense) (0.1) 0.2 0.2 0.2
---- --- --- ---
Total other expense (40.3) (38.6) (81.5) (82.8)
----- ----- ----- -----
Income before non-
controlling interest
and income taxes 108.5 30.3 172.6 42.6
Income tax provision (6.3) (3.2) (13.3) (6.2)
---- ---- ----- ----
Net income 102.2 27.1 159.3 36.4
Net income attributable
to non-controlling
interest 74.2 21.2 118.9 32.4
---- ---- ----- ----
Net income attributable
to ENLC $28.0 $5.9 $40.4 $4.0
===== ==== ===== ====
Net income attributable to ENLC per unit:
Basic common unit $0.15 $0.03 $0.22 $0.02
===== ===== ===== =====
Diluted common unit $0.15 $0.03 $0.22 $0.02
===== ===== ===== =====
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,
2018 2017 2018 2017
---- ---- ---- ----
Distribution declared by ENLK
associated with (1):
General partner
interest $0.6 $0.7 $1.2 $1.3
Incentive
distribution rights 14.8 14.6 29.6 29.3
ENLK common units
owned 34.6 34.6 69.1 69.1
---- ---- ---- ----
Total share of ENLK
distributions
declared $50.0 $49.9 $99.9 $99.7
Adjusted EBITDA of
EOGP (2) 10.3 5.1 19.2 7.7
Total cash available $60.3 $55.0 $119.1 $107.4
----- ----- ------ ------
Uses of cash:
General and
administrative
expenses (1.3) (1.6) (2.5) (2.6)
Current income taxes
(3) (0.1) (0.2) (0.2) (0.2)
Interest expense (0.9) (0.6) (1.7) (1.0)
Maintenance capital
expenditures (4) (0.1) - (0.2) -
Total cash used $(2.4) $(2.4) $(4.6) $(3.8)
ENLC cash available
for distribution $57.9 $52.6 $114.5 $103.6
===== ===== ====== ======
Actual declared
distribution to
common unitholders $48.9 $46.7 $97.1 $93.4
Distribution coverage 1.18x 1.13x 1.18x 1.11x
Distributions
declared per ENLC
unit $0.267 $0.255 $0.530 $0.510
(1) Represents distributions declared
by ENLK and to be paid to ENLC on
August 13, 2018 and distributions
paid by ENLK to ENLC on May 14,
2018, August 11, 2017, and May
12, 2017.
(2) Represents ENLC's interest in EOGP
adjusted EBITDA, which is
disbursed to ENLC by EOGP on a
monthly basis. EOGP adjusted
EBITDA is defined as earnings
before depreciation and
amortization and provision for
income taxes and includes
allocated expenses from ENLK.
(3) Represents ENLC's stand-alone
current tax expense.
(4) Represents ENLC's interest in
EOGP's maintenance capital
expenditures which is netted
against the monthly disbursement
of EOGP's adjusted EBITDA per (2)
above.
EnLink Midstream, LLC
Reconciliation of Net Income of ENLC to ENLC Cash Available for Distribution
(All amounts in millions)
(Unaudited)
Three Months Ended Six Months Ended
June 30, June 30,
2018 2017 2018 2017
---- ---- ---- ----
Net income of
ENLC $102.2 $27.1 $159.3 $36.4
Less: Net income
attributable to
ENLK 98.9 29.6 159.0 47.7
Net income (loss)
of ENLC
excluding ENLK $3.3 $(2.5) $0.3 $(11.3)
ENLC's share of
distributions
from ENLK (1) 50.0 49.9 99.9 99.7
ENLC's interest
in EOGP's non-
cash expenses
(2) (2.3) 4.2 2.4 8.2
ENLC deferred
income tax
expense (3) 8.4 3.3 14.2 5.8
Non-controlling
interest share
of ENLK's net
(income) loss
(4) (1.4) (2.2) (2.1) 1.2
Other items (5) (0.1) (0.1) (0.2) -
---- ---- ---- ---
ENLC cash
available for
distribution $57.9 $52.6 $114.5 $103.6
===== ===== ====== ======
(1) Represents distributions declared
by ENLK and to be paid to ENLC on
August 13, 2018 and distributions
paid by ENLK to ENLC on May 14,
2018, August 11, 2017, and May 12,
2017.
(2) Includes depreciation and
amortization, unit-based
compensation expense allocated to
EOGP, gains and losses on sale of
property, and non-cash revenue
recognized upon receipt of secured
term loan receivable related to
contract restructuring.
(3) Represents ENLC's stand-alone
deferred taxes.
(4) Represents NGP's 49.9% share of the
Delaware Basin JV, Marathon
Petroleum Corporation's 50% share
of the Ascension JV, and other
minor non-controlling interests.
(5) Represents ENLC's interest in
EOGP's maintenance capital
expenditures (which is netted
against the monthly disbursement
of EOGP's adjusted EBITDA) and
other non-cash items not included
in cash available for
distribution.
EnLink Midstream Partners, LP
Forward-Looking Reconciliation of Net Income to Adjusted EBITDA and Distributable Cash Flow (1)
(All amounts in millions)
(Unaudited)
2018 Outlook
Low Midpoint High
--- -------- ----
Net income (2) $329 $349 $369
Interest expense, net of
interest income 180 184 188
Depreciation and
amortization 556 566 576
Income from
unconsolidated
affiliate investments (15) (17) (19)
Distribution from
unconsolidated
affiliate investments 18 20 22
(Gain) loss on
disposition of assets 1 1 1
Unit-based compensation 39 34 29
Income taxes - 1 2
(Gain) loss on non-cash
derivatives 14 14 14
Payments under onerous
performance obligation
offset to other current
and long-term
liabilities (18) (18) (18)
Non-cash revenue from
contract restructuring (46) (46) (46)
Adjusted EBITDA before
non-controlling
interest $1,058 $1,088 $1,118
Non-controlling
interest share of
adjusted EBITDA (3) (58) (63) (68)
--- --- ---
Adjusted EBITDA, net to
EnLink Midstream
Partners, LP $1,000 $1,025 $1,050
------ ------ ------
Interest expense, net of
interest income (180) (184) (188)
Amortization of EOGP
installment payable
discount included in
interest expense (4) 1 1 1
Preferred unit accrued
cash distributions (89) (89) (89)
Current taxes and other (2) (6) (9)
Maintenance capital
expenditures, net to
EnLink Midstream
Partners, LP (50) (52) (55)
--- --- ---
Distributable cash flow $680 $695 $710
==== ==== ====
(1) The revised forward-looking net
income guidance for the year ended
December 31, 2018 includes the
actual results for the six months
ended June 30, 2018 and the
projected results for the second
half of the year ended December 31,
2018. The forward-looking net
income guidance from July 1, 2018
through December 31, 2018 excludes
the potential impact 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.
EnLink does not provide a
reconciliation of forward-looking
Net Cash Provided by Operating
Activities to Adjusted EBITDA
because the companies 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.
(2) Net income includes estimated net
income attributable to ENLK's non-
controlling interest in (i) ENLC's
16% share of net income from EOGP,
(ii) NGP's 49.9% share of net income
from the Delaware Basin JV and (iii)
Marathon Petroleum Company's 50%
share of net income from the
Ascension JV.
(3) Non-controlling interest share of
adjusted EBITDA includes estimates
for (i) ENLC's 16% share of adjusted
EBITDA from EOGP, (ii) NGP's 49.9%
share of adjusted EBITDA from the
Delaware Basin JV, (iii) Marathon's
50% share of adjusted EBITDA from
the Ascension JV and (iv) other
minor non-controlling interests.
(4) Amortization of the EOGP installment
payable discount is considered non-
cash interest under our credit
facility since the payment under the
payable is consideration for the
acquisition of the EOGP assets.
EnLink Midstream, LLC
Forward-Looking Reconciliation of Net Income of ENLC to ENLC Cash Available for Distribution (1)
(All amounts in millions)
(Unaudited)
2018 Outlook
Low Midpoint High
--- -------- ----
Net income of ENLC
(2) $285 $314 $343
Less: Net income
attributable to ENLK
(3) (280) (305) (330)
---- ---- ----
Net income of ENLC
excluding ENLK $5 $9 $13
ENLC's share of
distributions from
ENLK (4) 200 200 200
ENLC's interest in
EOGP non-cash
expenses 12 12 12
Non-controlling
interest share of
ENLK's net income
(5) (9) (9) (9)
ENLC deferred income
tax expense (6) 23 24 25
Maintenance capital
expenditures (7) (1) (1) (1)
--- --- ---
ENLC cash available
for distribution $230 $235 $240
==== ==== ====
(1) The revised forward-looking net
income guidance for the year ended
December 31, 2018 includes the
actual results for the six months
ended June 30, 2018 and the
projected results for the second
half of the year ended December 31,
2018. The forward-looking net
income guidance from July 1, 2018
through December 31, 2018 excludes
the potential impact 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) Net income of ENLC includes estimated
net income attributable to ENLC's
non-controlling interest in ENLK.
(3) Net income attributable to ENLK is
net of the estimated non-
controlling interest share
attributable to the Delaware Basin
JV, Ascension JV and EOGP.
(4) Represents quarterly distributions
estimated to be paid to ENLC by ENLK
for 2018.
(5) Represents estimated amounts for (i)
NGP's 49.9% share of adjusted EBITDA
from the Delaware Basin JV, (ii)
Marathon Petroleum Company's 50%
share of adjusted EBITDA from the
Ascension JV and (iii) other minor
non-controlling interests.
(6) Represents ENLC's estimated stand-
alone deferred taxes for 2018.
(7) Represents 2018 maintenance capital
expenditures attributable to ENLC's
share of EOGP.
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SOURCE EnLink Midstream
