EnLink Midstream Reports Second Quarter 2019 Results, Updates 2019 Guidance, and Announces Long-Term Natural Gas Transport Agreement in Louisiana
DALLAS, Aug. 6, 2019 /PRNewswire/ -- EnLink Midstream, LLC (NYSE: ENLC) (EnLink) reported financial results for the second quarter of 2019 and updated financial guidance for full-year 2019. EnLink also announced the signing of a precedent agreement for natural gas transportation with Venture Global Calcasieu Pass, LLC (Venture Global) related to Venture Global's planned Calcasieu Pass export facility in Louisiana.
Highlights
-- Reported a net loss attributable to EnLink of $16.1 million, compared to
net income of $28.0 million for the second quarter of 2018. Reported net
cash provided by operating activities of $257.5 million for the second
quarter of 2019.
-- Delivered adjusted EBITDA of $259.2 million, distributable cash flow
(DCF) of $167.6 million, and distribution coverage of 1.20x. Second
quarter results were impacted by the write off of EnLink's secured term
loan receivable due to the bankruptcy filing of a customer, White Star
Petroleum Holdings, LLC (White Star), that resulted in the recognition
of a $40.5 million after-tax loss in EnLink's consolidated statement of
operations.
-- Announced the signing of a precedent agreement for natural gas
transportation services related to Venture Global's Calcasieu Pass
liquefied natural gas (LNG) export facility. EnLink expects to spend
approximately $20 million on this project during 2020, at an attractive
adjusted EBITDA multiple of 1 to 2 times. Venture Global has secured
equity funding and is in the late stages of completing debt financing
for the Calcasieu Pass facility, and, should Venture Global reach a
positive final investment decision, EnLink's project is expected to be
operational during 2021.
-- Placed into service the 200 million cubic feet per day (MMcf/d)
Thunderbird natural gas processing plant in Oklahoma, resulting in a
total of 1.2 billion cubic feet per day (Bcf/d) of total gas processing
capacity in Central Oklahoma. The new processing plant averaged a
utilization rate of approximately 50% for the month of July.
-- Updated financial guidance due to moderating producer activity in
Oklahoma and a shift in timing of producer activity in the Permian
Basin:
-- Updated full-year 2019 net loss guidance to a range of $24 million
to $31 million, revised down from the previous guidance range of net
income between $18 million and $28 million. The updated range
includes a $40.5 million non-cash loss, net of taxes, related to the
complete write off of the White Star secured term loan receivable
recognized during the second quarter of 2019, and a $186.5 million
goodwill impairment recognized during the first quarter of 2019.
-- Updated full-year 2019 adjusted EBITDA guidance to a range of $1.07
billion to $1.10 billion.
-- Refined full-year estimated growth capital expenditures, net to
EnLink, guidance range to $630 million to $710 million, from the
original range of $565 million to $725 million. Growth capital
expenditures remain within the original guidance range even with new
project announcements in the Permian during the first quarter of
2019 due to successful sequencing of capital with well completions
in Oklahoma.
-- Updated target distribution growth rate to approximately 5% for
full-year 2019 over 2018 and, going forward, to a range of up to 5%
growth, from the previous guidance range of 5% to 10%.
-- Declared a quarterly cash distribution of $0.283 per unit on all
outstanding common units for the second quarter of 2019, which
represents approximately 6% growth over the declared distribution for
the second quarter of 2018.
Adjusted EBITDA and distributable cash flow used in this press release are non-GAAP measures and are explained in greater detail under "Non-GAAP Financial Information and Certain Definitions" below.
"EnLink's second quarter performance demonstrates the financial resilience of our business, the strength of our differentiated platform and the flexibility and diversity of our operations in the midst of an evolving operating environment," said Barry E. Davis, Executive Chairman. "During the quarter, outperformance in Louisiana and North Texas enabled us to deliver solid results despite moderated producer activity in Oklahoma and certain timing delays in the Permian.
"Looking ahead at the remainder of the year, we see stable growth, but the pace of that growth has moderated, particularly in Oklahoma. We are in a strong competitive position and are taking decisive actions to unlock the value of our business, optimize our performance, and execute on attractive growth opportunities. Our recent precedent agreement with Venture Global, which is expected to generate a highly attractive adjusted EBITDA multiple of between 1 to 2 times, is an excellent example of our ability to identify and execute on opportunities that strengthen our platform. Our financial strength, further enhanced by our partnership with GIP, will enable us to capitalize on these types of opportunities going forward."
Second Quarter 2019 Financial Results
-- Reported a net loss of $16.1 million, including a $40.5 million loss,
net of taxes, related to the complete write-off of a secured term loan
receivable from White Star. In May 2019, White Star defaulted on its
approximately $10 million installment payment under the secured term
loan receivable and filed for reorganization under Chapter 11 of the
U.S. Bankruptcy Code.
-- Achieved adjusted EBITDA net to EnLink of $259.2 million. If the
previously expected White Star payment of approximately $10 million had
been received, adjusted EBITDA net to EnLink would have been
approximately $269.2 million.
-- Reported net cash provided by operating activities of $257.5 million.
-- Achieved DCF of $167.6 million. If the previously expected White Star
payment of approximately $10 million had been received, DCF would have
been approximately $177.6 million.
-- Distribution coverage was 1.20x for the second quarter of 2019. If the
previously expected White Star payment of approximately $10 million had
been received, distribution coverage would have been approximately
1.27x.
-- Debt-to-adjusted EBITDA, as calculated under the terms of EnLink's
credit facility, was 4.0x.
-- Growth capital expenditures, net to EnLink, were approximately $141.9
million for the second quarter and $361.4 million for the first half of
2019.
-- As of August 1, EnLink had 487,245,808 common units outstanding.
Precedent Long-Term Natural Gas Transport Agreement Signed with Venture Global
-- EnLink entered into a new precedent agreement for natural gas
transportation with Venture Global, a provider of LNG, with export
facilities under development along the U.S. Gulf Coast.
-- Under the terms of the 20-year fixed-fee agreement, EnLink will
transport natural gas feedstock to Venture Global's Calcasieu Pass
facility in western Louisiana.
-- Growth capital expenditures, net to EnLink, associated with the
agreement are expected to be approximately $20 million. The majority of
the growth capital associated with this project will be spent during
2020, and the project is expected to generate an attractive adjusted
EBITDA multiple of between 1 to 2 times.
-- Venture Global has secured equity funding and is in the late stages of
completing debt financing for the Calcasieu Pass facility, and, should
Venture Global reach a positive final investment decision, EnLink's
project is expected to be operational during 2021.
Full-Year 2019 Financial Guidance Update
-- EnLink updated its financial 2019 guidance ranges due to moderating
producer activity in Oklahoma and a shift in timing in producer activity
in the Permian Basin.
-- A net loss range of $24 million to $31 million is projected for
full-year 2019, revised down from the previous guidance range of net
income between $18 million and $28 million. The updated range includes a
$40.5 million non-cash loss, net of taxes, related to the complete
write-off of the White Star secured term loan receivable recognized this
quarter and a $186.5 million goodwill impairment recognized during the
first quarter of 2019.
-- Adjusted EBITDA is projected to range from $1.07 billion to $1.10
billion for full-year 2019.
-- DCF is projected to range from $715 million to $735 million for
full-year 2019, relative to the previous guidance range of $730 million
to $800 million.
-- Growth capital expenditures net to EnLink for full-year 2019 are
projected to range from $630 million to $710 million, refined from the
prior range of $565 million to $725 million.
-- Annual, as declared, distribution growth is being refined to
approximately 5% for full-year 2019 over 2018, which is within the
previous guidance range of 5% to 10% growth for 2019. On a go-forward
basis, annual distribution growth is expected to be in the range of up
to 5%.
Second Quarter 2019 Segment Updates
Oklahoma:
-- Segment profit for the second quarter of 2019 was approximately 3%
higher as compared to the first quarter of 2019 and 7% higher as
compared to the second quarter of 2018 (excluding the non-cash $45.5
million contract restructuring benefit related to White Star reported
during the second quarter of 2018).
-- The Oklahoma segment also achieved natural gas volume growth quarter
over quarter and year over year. Natural gas gathering and
transportation volumes for the second quarter of 2019 were approximately
6% higher as compared to the first quarter of 2019 and approximately 7%
higher as compared to the second quarter of 2018. Average natural gas
processing volumes for the second quarter of 2019 increased
approximately 5% and 8% when compared to the first quarter of 2019 and
the second quarter of 2018, respectively.
-- Average crude gathering volumes in the second quarter of 2019 increased
significantly quarter over quarter and year over year. Crude gathering
volumes for the second quarter of 2019 were approximately 84% higher as
compared to the first quarter of 2019 and approximately 300% higher as
compared to the second quarter of 2018 due to the continued ramp up of
crude gathering services in the STACK play in Oklahoma.
-- EnLink's previously announced 200 MMcf/d Thunderbird processing plant
became operational at the end of the second quarter of 2019. With the
completion of the Thunderbird natural gas processing plant, EnLink's
total gas processing capacity in Central Oklahoma exceeds 1.2 Bcf/d.
Volumes processed by Thunderbird averaged around 100 MMcf/d during July.
-- Oklahoma segment profit is forecasted to grow by approximately 5% to 10%
in the second half of 2019 as compared to the first half of 2019 because
of expected increased volume throughput.
Permian Basin:
-- The Permian Basin segment reported growth in segment profit of
approximately 7% for the second quarter of 2019 as compared to the
second quarter of 2018. Permian segment profit declined 13% for the
second quarter of 2019 as compared to the first quarter of 2019, due
primarily to lower commodity prices during the period and lower gross
operating margin contributions from EnLink's Permian crude business due
to the impact of crude price fluctuations. EnLink hedges exposure to
crude price fluctuations, and will realize the benefit of some of the
related hedges for the Permian crude business in the third quarter of
2019.
-- Average natural gas volume activity realized strong growth for the
second quarter of 2019, as compared to the second quarter of 2018, with
average gathering and transportation volumes increasing by approximately
32%, while processing volumes increased by approximately 37% over the
same period. Average natural gas gathering and transportation volumes
for the second quarter of 2019 experienced growth of 3% as compared to
the first quarter of 2019, and average processing volumes experienced 2%
growth as compared to the first quarter of 2019.
-- Average crude gathering volumes achieved growth for the second quarter
of 2019, increasing approximately 20% as compared to the second quarter
of 2018 and reflecting a slight decline of 1% over the first quarter of
2019 driven primarily by lower trucking volumes.
-- Permian Basin segment profit is forecasted to grow by approximately 15%
to 25% in the second half of 2019 as compared to the first half because
of expected increased volume throughput.
Louisiana:
-- Segment profit contribution from the Louisiana segment for the second
quarter of 2019 was unchanged as compared to the second quarter of 2018
and declined 15% as compared to the first quarter of 2019. The second
quarter of the year tends to be the weakest quarter for the Louisiana
segment, mainly driven by normal seasonal activity related to EnLink's
Gulf Coast NGL operations. The Louisiana natural gas system was also
impacted by normal course contract roll-offs, as expected, and
re-contracting in a lower natural gas pricing environment. EnLink's
natural gas system has strategic Gulf Coast access to growing demand
markets and is expected to generate growing cash flows over the
long-term.
-- The Cajun-Sibon III NGL pipeline expansion became operational during the
second quarter of 2019, increasing liquids transportation capabilities
from the Mont Belvieu NGL hub region to EnLink's fractionation
facilities on the Louisiana Gulf Coast. Cajun-Sibon III expands EnLink's
NGL transport capacity to approximately 185,000 barrels per day. Growth
capital expenditures for Cajun-Sibon III were approximately $50 million,
which are expected to generate an average annual adjusted EBITDA
multiple of 2 to 3 times. EnLink experienced record NGL volumes of
178,000 barrels per day during the second quarter of 2019, and the
Cajun-Sibon III expansion being in full-service will be a key growth
driver during the second half of 2019.
-- Average natural gas gathering and transportation volumes activity on
EnLink's Louisiana system for the second quarter of 2019 decreased by
approximately 7% and 8%, as compared to the first quarter of 2019 and
the second quarter of 2018, respectively.
-- Average natural gas processing volumes decreased by approximately 28%
and 15% as compared to the first quarter of 2019 and the second quarter
of 2018, respectively, due to a reduction in opportunity processing from
a generally weaker commodity price environment. This tends to be a
low-margin activity for EnLink, thus the impact on segment profit for
the second quarter of 2019 was insignificant.
-- Average crude volumes handled in EnLink's Ohio River Valley operations
increased during the second quarter of 2019, as compared to the first
quarter of 2019 and the second quarter of 2018, by approximately 33% and
25%, respectively, due to improved producer activity in the region.
-- Louisiana segment profit is forecasted to grow by approximately 5% to
10% in the second half of 2019, as compared to the first half because of
expected increased volume throughput.
North Texas:
-- In line with company expectations, segment profit declined by
approximately 21% for the second quarter of 2019 as compared to the
second quarter of 2018 because of the expiration of minimum volume
commitments with Devon Energy Corp. on December 31, 2018. Minimum volume
commitment deficiency payments accounted for approximately 22% of
segment profit for the second quarter of 2018. Segment profit for the
second quarter of 2019 reduced modestly, by approximately 3% as compared
to the first quarter of 2019.
-- Average natural gas volume decline for the second quarter of 2019, as
compared to the second quarter of 2018, was between 2% and 6% for
gathering, transmission, and processing volumes.
-- North Texas segment profit is forecasted to decline by approximately 5%
to 10% in the second half of 2019, as compared to the first half as a
result of the expected decline in volume throughput due to limited new
drilling activity.
Second Quarter 2019 Earnings Call Details
EnLink will hold a conference call to discuss second quarter 2019 results on Wednesday, August 7, 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/10132191 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 Midstream reliably operates a differentiated midstream platform that is built for long-term, sustainable value creation. EnLink's best-in-class services span the midstream value chain, providing natural gas, crude oil, condensate, and NGL capabilities. Our purposely built, integrated asset platforms are in premier production basins and core demand centers, including the Permian Basin, Oklahoma, North Texas, and the Gulf Coast. EnLink's strong financial foundation and commitment to execution excellence drive competitive returns and value for our employees, customers, and investors. Headquartered in Dallas, EnLink is publicly traded through EnLink Midstream, LLC (NYSE: ENLC). Visit www.EnLink.com to learn how EnLink connects energy to life.
Non-GAAP Financial Information and Other Definitions
This press release contains non-generally accepted accounting principles financial measures that we refer to as adjusted EBITDA, and distributable cash flow available to common unitholders (distributable cash flow). 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, loss on secured term loan receivable, successful 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 ENLC), less interest expense, interest rate swaps, current income taxes and other non-distributable cash flows, accrued cash distributions on EnLink Midstream Partners, LP's (ENLK) Series B Cumulative Convertible Preferred Units (the "ENLK Series B Preferred Units") and ENLK's Series C Fixed-to-Floating Rate Cumulative Redeemable Perpetual Preferred Units (the "ENLK 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.
Distribution coverage is calculated by dividing distributable cash flow by distributions declared to common unitholders.
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.
EnLink believes 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 the company'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 our short-term incentive program for compensating 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 loss on secured term loan receivable. 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 ENLC's Annual Report on Form 10-K for the year ended December 31, 2018, and, when available, "Item 1. Financial Statements - Note 14-Segment Information" in ENLC's Quarterly Report on Form 10-Q for the three and six months ended June 30, 2019, for further information about segment profit (loss).
Adjusted EBITDA and distributable cash flow, 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 EnLink'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 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, when additional capacity will be operational, timing for completion of construction or expansion projects, timing of third party projects and associated growth capital expenditures, expected financial and operational results associated with certain projects or growth capital expenditures, future operational results of our customers, results in certain basins, future rig count information, objectives, strategies, 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) potential conflicts of interest of Global Infrastructure Partners ("GIP") with us and the potential for GIP to favor GIP's own interests to the detriment of the unitholders, (b) 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, (c) a default under GIP's credit facility could result in a change in control of us, could adversely affect the price of our common units, and could result in a default under our credit facility, (d) the dependence on Devon for a substantial portion of the natural gas and crude that we gather, process, and transport, (e) developments that materially and adversely affect Devon or other customers, (f) adverse developments in the midstream business that may reduce our ability to make distributions, (g) competition for crude oil, condensate, natural gas, and NGL supplies and any decrease in the availability of such commodities, (h) decreases in the volumes that we gather, process, fractionate, or transport, (i) construction risks in our major development projects, (j) our ability to receive or renew required permits and other approvals, (k) changes in the availability and cost of capital, including as a result of a change in our credit rating, (l) operating hazards, natural disasters, weather-related issues or delays, casualty losses, and other matters beyond our control, (m) impairments to goodwill, long-lived assets and equity method investments, and (n) 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 EnLink management team based the forecasted financial information included herein on certain information and assumptions, including, among others, the producer budgets / forecasts to which EnLink has access as of the date of this press release and the projects / opportunities expected to require growth capital expenditures as of the date of this press release. The assumptions, information, 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, LLC
Selected Financial Data
(All amounts in millions except per unit amounts)
(Unaudited)
Three Months Ended
Six Months Ended
June 30, June 30,
2019 2018 2019 2018
Total revenues $
1,710.0 $
1,764.7 $
3,489.2 $
3,526.4
Cost of sales 1,300.1 1,325.6 2,663.5 2,707.1
Gross operating margin 409.9 439.1 825.7 819.3
Operating costs and expenses, excluding
cost of sales:
Operating expenses 117.9 113.4 232.4 222.6
General and
administrative 32.2 30.4 83.6 57.9
Loss on disposition of
assets 0.1 1.2 0.1 1.3
Depreciation and
amortization 153.7 145.3 305.8 283.4
Impairments - 186.5
Loss on secured term
loan receivable 52.9 52.9
Total operating costs
and expenses, excluding
cost of sales 356.8 290.3 861.3 565.2
Operating income (loss) 53.1 148.8 (35.6) 254.1
Other income (expense):
Interest expense, net of
interest income (54.3) (44.6) (103.9) (89.1)
Income from
unconsolidated
affiliates 4.7 4.4 10.0 7.4
Other income (expense) 0.2 (0.1) 0.2 0.2
Total other expense (49.4) (40.3) (93.7) (81.5)
Income (loss) before
non-controlling
interest and income
taxes 3.7 108.5 (129.3) 172.6
Income tax benefit
(provision) 5.4 (6.3) 3.6 (13.3)
Net income (loss) 9.1 102.2 (125.7) 159.3
Net income attributable
to non-controlling
interest 25.2 74.2 66.7 118.9
Net income (loss)
attributable to ENLC $
(16.1) $
28.0 $
(192.4) $
40.4
Net income (loss) attributable to ENLC
per unit:
Basic common unit $
(0.03) $
0.15 $
(0.44) $
0.22
Diluted common unit $
(0.03) $
0.15 $
(0.44) $
0.22
EnLink Midstream, LLC
Reconciliation of Net Income to Adjusted EBITDA
(All amounts in millions except ratios and per unit amounts) (Unaudited)
Three Months Ended Six Months Ended
June 30, June 30,
2019 2018 2019 2018
---
Net income (loss) $
9.1 $
102.2 $
(125.7) $
159.3
Interest expense, net
of interest income 54.3 44.6 103.9 89.1
Depreciation and
amortization 153.7 145.3 305.8 283.4
Impairments - 186.5
Non-cash revenue from
contract
restructuring (1) - (45.5) (45.5)
Loss on secured term
loan receivable (1) 52.9 52.9
Income from
unconsolidated
affiliates (4.7) (4.4) (10.0) (7.4)
Distributions from
unconsolidated
affiliates 7.6 5.4 10.1 11.4
Loss on disposition of
assets 0.1 1.2 0.1 1.3
Unit-based
compensation 8.0 9.6 19.1 14.7
Income tax provision
(benefit) (5.4) 6.3 (3.6) 13.3
(Gain) loss on non-
cash derivatives (7.2) 10.5 (5.2) 14.0
Payments under onerous
performance
obligation offset to
other current and
long-term
liabilities (4.5) (4.5) (9.0) (9.0)
Transaction costs (2) 0.4 13.9
Other (3) 0.1 (0.2) 0.4 0.8
Adjusted EBITDA before
non-controlling
interest 264.4 270.5 $
539.2 $
525.4
Non-controlling
interest share of
adjusted EBITDA from
joint ventures (4) (5.2) (4.1) (11.8) (7.7)
Adjusted EBITDA, net
to ENLC (5) $
259.2 $
266.4 $
527.4 $
517.7
(1) In May 2018,
we
restructured
our natural
gas gathering
and
processing
contract with
White Star,
and, as a
result,
recognized
non-cash
revenue
representing
the
discounted
present value
of a secured
term loan
receivable
granted to us
by White
Star. In late
May 2019,
White Star,
the
counterparty
to our $58.0
million
second lien
secured term
loan
receivable,
defaulted on
its
approximately
$10 million
installment
payment under
the term loan
and filed for
reorganization
under Chapter
11 of the
U.S.
Bankruptcy
Code. We do
not believe
that it is
probable that
White Star
will be able
to repay the
outstanding
amounts owed
to us under
the second
lien secured
term loan.
(2) Represents
transaction
costs
primarily
attributable
to costs
incurred
related to
the
acquisition
of all
outstanding,
publicly-
held ENLK
common units.
(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 from
joint
ventures
includes 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) If the White
Star payment
of
approximately
$10 million,
as discussed
in (1) above,
had been
received in
May of 2019,
adjusted
EBITDA would
have been
approximately
$269.2
million for
the three
months ended
June 30,
2019, and
approximately
$537.4
million for
the six
months ended
June 30,
2019.
EnLink Midstream, LLC
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,
---
2019 2019
---
Net cash provided
by operating
activities $
257.5 $
521.5
Interest expense
(1) 53.9 103.4
Current income tax
expense 0.3 1.3
Transaction costs
(2) 0.4 13.9
Other (3) 1.6 0.1
Changes in operating assets and
liabilities which (provided) used cash:
Accounts
receivable,
accrued revenues,
inventories, and
other (165.9) (263.3)
Accounts payable,
accrued product
purchases, and
other accrued
liabilities (4) 116.6 162.3
Adjusted EBITDA
before non-
controlling
interest 264.4 539.2
Non-controlling
interest share of
adjusted EBITDA
from joint
ventures (5) (5.2) (11.8)
Adjusted EBITDA,
net to ENLC 259.2 527.4
Interest expense,
net of interest
income (54.3) (103.9)
Current taxes and
other (1.0) (3.5)
Maintenance capital
expenditures, net
to ENLC (6) (13.2) (21.7)
ENLK preferred unit
accrued cash
distributions (7) (23.1) (45.8)
Distributable cash
flow (8) $
167.6 $
352.5
Actual declared
distribution to
common unitholders $
139.2 $
276.6
Distribution
coverage 1.20x 1.27x
Distributions
declared per ENLC
unit $
0.283 $
0.562
(1) Net of
amortization
of debt
issuance
costs and
discount and
premium,
which are
included in
interest
expense but
not included
in net cash
provided by
operating
activities,
and non-cash
interest
income, which
is netted
against
interest
expense but
not included
in adjusted
EBITDA.
(2) Represents
transaction
costs
primarily
attributable
to costs
incurred
related to
the
acquisition
of all
outstanding,
publicly-
held ENLK
common units.
(3) Includes
accruals for
settled
commodity
swap
transactions
and
distributions
received from
equity method
investments
to the extent
those
distributions
exceed
earnings from
the
investment.
(4) Net of
payments
under onerous
performance
obligation
offset to
other current
and long-
term
liabilities.
(5) Non-
controlling
interest
share of
adjusted
EBITDA from
joint
ventures
includes
NGP's 49.9% s
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.
(6) Excludes
maintenance
capital
expenditures
that were
contributed
by other
entities and
relate to the
non-
controlling
interest
share of our
consolidated
entities.
(7) Represents the
cash
distributions
earned by the
ENLK Series B
Preferred
Units and
ENLK Series C
Preferred
Units of
$17.1 million
and $6.0
million,
respectively,
for the three
months ended
June 30,
2019, and
cash
distributions
earned by the
ENLK Series B
Preferred
Units and
ENLK Series C
Preferred
Units of
$33.8 million
and $12.0
million,
respectively,
for the six
months ended
June 30,
2019. Cash
distributions
to be paid to
holders of
the ENLK
Series B
Preferred
Units and
ENLK Series C
Preferred
Units are not
available to
common
unitholders.
(8) If the White
Star payment
of
approximately
$10 million
had been
received in
May of 2019,
distributable
cash flow
would have
been
approximately
$177.6
million for
the three
months ended
June 30,
2019, and
approximately
$362.5
million for
the six
months ended
June 30,
2019.
Distributable cash flow is not presented for the three and six months ended June 30, 2018 because distributable cash flow was not used as a supplemental liquidity measure by ENLC during 2018. ENLC began using distributable cash flow as a supplemental liquidity measure in 2019 as a result of the simplification of our corporate structure in the Merger.
EnLink Midstream, LLC
Operating Data
(Unaudited)
Three Months Ended Six Months Ended
June 30, June 30,
2019 2018 2019 2018
---
Midstream Volumes:
Permian Segment
Gathering and
Transportation
(MMBtu/d) 676,000 511,300 666,800 467,900
Processing (MMBtu/d) 724,100 529,100 718,100 485,800
Crude Oil Handling
(Bbls/d) 145,100 119,700 146,200 113,800
North Texas Segment
Gathering and
Transportation
(MMBtu/d) 1,646,900 1,747,000 1,664,900 1,756,800
Processing (MMBtu/d) 770,100 754,000 750,100 753,100
Oklahoma Segment
Gathering and
Transportation
(MMBtu/d) 1,314,900 1,235,500 1,279,800 1,142,200
Processing (MMBtu/d) 1,298,800 1,200,700 1,265,400 1,135,400
Crude Oil Handling
(Bbls/d) 53,800 13,000 41,600 10,600
Louisiana Segment
Gathering and
Transportation
(MMBtu/d) 1,925,900 2,094,100 1,997,800 2,158,100
Processing (MMBtu/d) 337,100 395,600 402,200 418,600
Crude Oil Handling
(Bbls/d) 20,000 15,700 17,500 13,600
NGL Fractionation
(Gals/d) 7,477,400 6,480,100 7,227,000 6,412,200
Brine Disposal (Bbls/
d) 3,400 3,500 3,400 3,200
EnLink Midstream, LLC
Forward-Looking Reconciliation of Net Income to Full-Year Adjusted EBITDA Guidance (1)
(All amounts in millions)
(Unaudited)
Revised 2019 Outlook
Low Midpoint High
---
Net loss of EnLink
Midstream, LLC (2) $
(24) $
(28) $
(31)
Interest expense, net
of interest income 209 210 212
Depreciation and
amortization 609 621 634
Impairments 187 187 187
Income from
unconsolidated
affiliate investments (17) (18) (19)
Distributions from
unconsolidated
affiliate investments 16 17 18
Unit-based
compensation 40 44 46
Income taxes 24 28 31
(Gain) loss on non-
cash derivatives (4) (5) (6)
Payments under onerous
performance
obligation offset to
other current and
long-term
liabilities (10) (10) (10)
Loss on secured term
loan receivable (3) 53 53 53
Other (4) 14 14 14
Adjusted EBITDA before
non-controlling
interest 1,097 1,113 1,129
Non-controlling
interest share of
adjusted EBITDA (5) (27) (28) (29)
Adjusted EBITDA, net
to EnLink Midstream,
LLC 1,070 1,085 1,100
Interest expense, net
of interest income (209) (210) (212)
Current taxes and
other (8) (7) (5)
Maintenance capital
expenditures, net to
ENLK (45) (50) (55)
Preferred unit accrued
cash distributions
(6) (93) (93) (93)
Distributable cash
flow $
715 $
725 $
735
(1) Represents the
revised
forward-
looking net
income
guidance for
the year ended
December 31,
2019, and
includes the
actual results
for the six
months ended
June 30, 2019
and the
projected
results for
the second
half of the
year ended
December 31,
2019. The
forward-
looking net
income
guidance from
July 1, 2019
through
December 31,
2019 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 company is
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
company's
control.
(2) Net income
includes
estimated net
income
attributable
to (i) NGP's
49.9% share of
net income
from the
Delaware Basin
JV and (ii)
Marathon
Petroleum
Corp.'s 50%
share of net
income from
the Ascension
JV.
(3) Represents non-
cash loss of
$52.9 million
related to the
write-off of
the White Star
secured term
loan
receivable.
(4) Includes (i)
estimated
accretion
expense
associated
with asset
retirement
obligations;
(ii) estimated
non-cash
rent, which
relates to
lease
incentives
pro-rated
over the lease
term; and
(iii)
transaction
costs,
including
transaction
costs related
to the
simplification
transaction.
(5) Non-
controlling
interest share
of adjusted
EBITDA
includes
estimates for
(i) NGP's
49.9% share of
adjusted
EBITDA from
the Delaware
Basin JV, (ii)
Marathon's 50%
share of
adjusted
EBITDA from
the Ascension
JV, and (iii)
other minor
non-
controlling
interests.
(6) Represents the
cash
distributions
earned by the
ENLK Series B
Preferred
Units and ENLK
Series C
Preferred
Units. Cash
distributions
to be paid to
holders of the
ENLK Series B
Preferred
Units and ENLC
Series C
Preferred
Units are not
available to
common
unitholders.
EnLink Midstream, LLC
Forward-Looking Reconciliation of Net Income to Full-Year Adjusted EBITDA Guidance (1)
Published May 2019
(All amounts in millions)
(Unaudited)
2019 Outlook
Low Midpoint High
Net income of EnLink Midstream,
LLC (2) $
18 $
23 $
28
Interest expense, net of
interest income 211 212 213
Depreciation and amortization 594 624 654
Impairments 187 187 187
Income from unconsolidated
affiliate investments (15) (16) (17)
Distributions from
unconsolidated affiliate
investments 14 15 16
Unit-based compensation 44 46 49
Income taxes 57 65 73
Payments under onerous
performance obligation offset
to other current and long-
term liabilities (10) (10) (10)
Payments on secured term loan
receivable (3) 17 17 17
Other (4) (1) (1) (1)
Adjusted EBITDA before non-
controlling interest 1,116 1,162 1,209
Non-controlling interest share
of adjusted EBITDA from joint
ventures (5) (31) (32) (34)
Adjusted EBITDA, net to EnLink
Midstream, LLC 1,085 1,130 1,175
Interest expense, net of
interest income (211) (212) (213)
Current taxes and other (12) (11) (10)
Maintenance capital
expenditures (6) (40) (50) (60)
Preferred unit accrued
distributions (7) (92) (92) (92)
Distributable cash flow $
730 $
765 $
800
(1) Represents the
forward-
looking net
income
guidance for
the year ended
December 31,
2019 adjusted
to include
$187 million
of non-cash
impairment
recognized in
the first
quarter of
2019. The
forward-
looking net
income
guidance
excludes the
potential
impact of
gains or
losses on
derivative
activity,
gains or
losses on
disposition of
assets,
impairment
expense (other
than the $187
million
impairment
recognized in
the first
quarter of
2019), 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
includes
estimated net
income
attributable
to (i) NGP's
49.9% share of
net income
from the
Delaware Basin
JV, (ii)
Marathon
Petroleum
Corp.'s 50%
share of net
income from
the Ascension
JV., and (iii)
other minor
non-
controlling
interests.
(3) Represents
estimated
payments on
secured term
loan
receivable
from White
Star.
(4) Includes (i)
estimated
accretion
expense
associated
with asset
retirement
obligations
and (ii)
estimated non-
cash rent,
which relates
to lease
incentives
pro-rated
over the lease
term.
(5) Non-
controlling
interest share
of adjusted
EBITDA
includes
estimates for
(i) NGP's
49.9% share of
adjusted
EBITDA from
the Delaware
Basin JV, (ii)
Marathon's 50%
share of
adjusted
EBITDA from
the Ascension
JV and (iii)
other minor
non-
controlling
interests.
(6) Excludes
maintenance
capital
expenditures
that are
contributed by
other entities
and relate to
the non-
controlling
interest share
of our
consolidated
entities.
(7) Represents the
cash
distributions
earned by the
ENLK Series B
Preferred
Units and ENLC
Series C
Preferred
Units. Cash
distributions
to be paid to
holders of the
ENLK Series B
Preferred
Units and ENLC
Series C
Preferred
Units are not
available to
common
unitholders.
View original content to download multimedia:http://www.prnewswire.com/news-releases/enlink-midstream-reports-second-quarter-2019-results-updates-2019-guidance-and-announces-long-term-natural-gas-transport-agreement-in-louisiana-300897544.html
SOURCE EnLink Midstream
