EnLink Midstream Reports Fourth Quarter and Full-Year 2019 Results, Reaffirms 2020 Financial Guidance, and Provides Segment Updates
DALLAS, Feb. 25, 2020 /PRNewswire/ -- EnLink Midstream, LLC (NYSE: ENLC) (EnLink) today reported financial results for the fourth quarter and full-year of 2019, reaffirmed previously announced 2020 financial guidance, and provided a segment level update.
Highlights:
-- Reported a net loss for the fourth quarter of 2019 driven by a non-cash
impairment of goodwill that was created at the formation of EnLink in
2014.
-- Delivered 11% sequential growth in adjusted EBITDA for the fourth
quarter as compared to the third quarter of 2019. The increase was
driven primarily by strong performance in the natural gas liquids (NGL)
business, which experiences a seasonal high during the fourth quarter.
-- Achieved 6% sequential growth in average daily NGL volume throughput
during the fourth quarter as compared to the third quarter of 2019.
-- Achieved 7% and 6% sequential growth in average daily natural gas
gathering and processing volumes in the Permian Basin, respectively.
-- Reported full-year 2019 growth capital expenditures, net to EnLink, was
5% below the low end of the guidance range.
-- Completed strategic growth projects across core asset areas during 2019,
including:
-- The Lobo III natural gas processing facility in the Delaware Basin;
-- The Riptide natural gas processing facility expansion in the Midland
Basin;
-- The Cajun-Sibon III NGL pipeline expansion in Louisiana;
-- The Thunderbird natural gas processing facility in Oklahoma; and
-- A high-return, low-capital asset acquisition in North Texas.
-- Reaffirmed 2020 financial guidance previously announced on January 15,
2020.
-- As separately announced today, appointed two new directors - Deborah G.
Adams and James K. Lee - to the Board of Directors, effective March 1,
2020. Concurrently, Matthew C. Harris will step down as a director.
EnLink also announced the appointment of Walter Pinto to its senior
leadership team as Senior Vice President, Operational Excellence,
effective March 16, 2020.
CEO Commentary on 2019 and Forward Outlook
"EnLink finished off 2019 with strong adjusted EBITDA performance in the fourth quarter, driven by our diversified asset platform and solid execution. 2019 was a year of transition for EnLink, including the evolution from a period of high growth into an era of operational optimization. We continue to take necessary actions to position EnLink financially and operationally for long-term success, while maintaining an unrelenting commitment to deliver best-in-class services reliably and safely," said Barry E. Davis, EnLink Chairman and Chief Executive Officer.
"Our large-scale, diversified platform generates significant, stable cash flows from our two growth platforms in the Permian and Louisiana, and our two strong, free-cash-flow-generating systems in Oklahoma and North Texas. The Permian continues to drive near-term growth, with producers remaining very active on our footprint, while our Louisiana platform provides long-term growth opportunities.
"We are confident that the earnings power of our platform combined with our execution plan will deliver superior returns for investors over the long-term. As we turn to 2020 and beyond, we believe our strategic asset platform will allow us to differentiate EnLink by generating excess free cash flow, supported by manageable capital needed to modestly grow adjusted EBITDA."
Adjusted EBITDA, distributable cash flow, and excess free cash flow used in this press release are non-GAAP measures and are explained in greater detail under "Non-GAAP Financial Information and Other Definitions" below.
Fourth Quarter
and Full-Year
2019 Results
$MM, unless noted Fourth Quarter 2019
Full-Year 2019
--- ---
Net (Loss)
Attributable to
EnLink ($938.7) ($1,119.3)
Adjusted EBITDA,
net to EnLink $290.9 $1,079.5
Net Cash Provided
by Operating
Activities $214.4 $991.9
Distributable
Cash Flow $203.1 $723.8
Distribution
Coverage
2.20x
1.42x
Growth Capital
Expenditures,
net to EnLink $90 $600
Debt to Adjusted
EBITDA, net to
EnLink
4.3x
4.3x
-- Reported net loss attributable to EnLink of $938.7 million for the
fourth quarter of 2019 and $1.12 billion for the full-year 2019. The net
loss for 2019 includes non-cash impairments, primarily related to
goodwill created at the formation of EnLink in 2014.
-- Debt-to-adjusted EBITDA, as calculated under the terms of EnLink's
credit facility, was 4.3x as of December 31, 2019.
-- As of February 19, 2020, EnLink had 488,445,794 common units
outstanding.
2020 Financial Guidance
Reaffirmed
$MM, unless noted 2020 Guidance
---
Net Income (1)
$160 - $230
Adjusted EBITDA, net to EnLink
$1,070 - $1,130
Maintenance Capital, net to EnLink
$40 - $50
Distributable Cash Flow
$715 - $755
Distribution Coverage
1.95x - 2.05x
Growth Capital Expenditures, net to
EnLink
$275 - $375
Total Capital Expenditures, net to
EnLink
$315 - $425
Debt to Adjusted EBITDA, net to
EnLink
4.0x - 4.3x
Excess Free Cash Flow (after total
capital expenditures &
distributions)
$10 - $70
Annualized 4Q19 Declared
Distribution per Common Unit
$0.75/ unit
(1) Net income is
before non-
controlling
interest.
-- 2020 total capital expenditures, net to EnLink, are expected to be fully
self-funded with internally generated cash flows, and EnLink does not
expect to require external financing during 2020.
-- Debt-to-adjusted EBITDA is forecasted to be in the range of 4.0x and
4.3x for 2020, as calculated under the terms of EnLink's credit
facility. The company's long-term leverage target of below 4.0x remains
unchanged. EnLink has no near-term senior note maturities, and has
limited senior note refinancing needs over the next five years.
-- Excess free cash flow for full-year 2020 is expected to primarily be
generated during the second half of 2020, with growth in excess free
cash flow expected in 2021.
Segment Updates
Permian Basin:
-- Segment profit of $37.2 million for the fourth quarter of 2019 was
approximately 2% higher as compared to the third quarter of 2019 and
unchanged as compared to the fourth quarter of 2018. The segment profit
contribution from EnLink's Permian natural gas business for the fourth
quarter of 2019 increased by 7% as compared to the third quarter of
2019, due to strong gas gathering and processing volume growth, which
was offset by a reduction in segment profit contribution from EnLink's
Permian crude business. The Permian crude business experienced a
reduction in segment profit despite a 9% increase in crude oil handling
volumes primarily due to the expiration of a minimum volume commitment
with Devon Energy Corp. on south Texas crude operations during the third
quarter of 2019.
-- Average natural gas gathering and transportation volumes for the fourth
quarter of 2019 were approximately 8% higher as compared to the third
quarter of 2019 and approximately 36% higher as compared to the fourth
quarter of 2018. Average natural gas processing volumes for the fourth
quarter of 2019 increased approximately 6% and 45% as compared to the
third quarter of 2019 and the fourth quarter of 2018, respectively.
EnLink continues to benefit from strong producer activity on its Permian
footprint, with significant volumetric growth expected throughout 2020.
-- Average crude oil handling volumes for the fourth quarter of 2019
increased by approximately 9% as compared to the third quarter of 2019
and were approximately 7% lower as compared to the fourth quarter of
2018. The sequential increase was primarily driven by growth in crude
gathering on the Delaware Basin pipeline system, while the decline as
compared to the prior year fourth quarter primarily resulted from a
strategic decision to reduce low-margin crude trucking activity in the
Midland Basin.
-- EnLink recently announced a series of low-cost, high-return expansion
and debottlenecking projects that are expected to add approximately 70
million cubic feet per day (MMcf/d) of natural gas processing capacity
to its Midland Basin footprint during 2020.
-- Construction of EnLink's previously announced Tiger natural gas
processing facility in the Delaware Basin remains on track to become
operational during in the second half of 2020. Upon the completion of
the Tiger plant and the Riptide expansions, EnLink's Permian natural gas
processing capacity will be approximately 1.1 billion cubic feet per day
(Bcf/d) by the fourth quarter of 2020.
-- Segment profit for full-year 2020 is expected to range from $200 million
to $220 million, with growth over full-year 2019 expected to be driven
primarily by strong producer activity in both the Delaware Basin and
Midland Basin.
-- The Permian is expected to account for approximately 20% of EnLink's
total segment profit during 2020. Given the significant base of
accretive growth opportunities on EnLink's Permian system, EnLink
expects to allocate approximately 70% of total capital expenditures to
Permian growth projects. The projects will become operational during
2020 and the first half of 2021, underpinning the strong segment profit
growth forecasted for 2020 and 2021.
Louisiana:
-- Segment profit of $86.0 million for the fourth quarter of 2019 was
approximately 28% higher as compared to the third quarter of 2019 and
26% higher as compared to the fourth quarter of 2018. The significant
increase in segment profit as compared to prior quarters was driven by a
full quarter of contribution related to the Cajun-Sibon III expansion
completed in April 2019 and the seasonal high for EnLink's NGL business.
-- Average NGL fractionation volumes for the fourth quarter of 2019 were
approximately 6% higher as compared to the third quarter of 2019.
Average NGL fractionation volumes for the fourth quarter of 2019
increased by approximately 10% as compared to the fourth quarter of
2018, driven by the Cajun-Sibon III expansion.
-- Average natural gas gathering and transportation volumes for the fourth
quarter of 2019 were approximately 2% higher as compared to the third
quarter of 2019 and approximately 3% lower as compared to the fourth
quarter of 2018. Average natural gas processing volumes for the fourth
quarter of 2019 increased approximately 6% and decreased 10% as compared
to the third quarter of 2019 and the fourth quarter of 2018,
respectively. Louisiana volume declines from the fourth quarter of 2018
to the fourth quarter of 2019 were a result of a less favorable
commodity price environment in the fourth quarter of 2019 as compared to
the fourth quarter of 2018.
-- Average crude volumes on EnLink's Ohio River Valley system for the
fourth quarter of 2019 were approximately 10% lower as compared to the
third quarter of 2019 and increased by 12% as compared to the fourth
quarter of 2018. Volumes during the fourth quarter of 2019 as compared
to prior periods fluctuated as a result of normal variations in trucking
activities.
-- Segment profit for full-year 2020 is expected to range from $300 million
to $320 million, with growth driven primarily by the NGL business.
-- Louisiana is expected to account for approximately 25% of EnLink's total
segment profit in 2020, with approximately 14% of total capital
expenditures expected to be allocated to Louisiana operations. Louisiana
is expected to generate significant segment free cash flow during 2020.
Oklahoma:
-- Segment profit of $117.2 million for the fourth quarter of 2019 was
approximately 7% higher as compared to the third quarter of 2019 and
approximately 5% higher as compared to the fourth quarter of 2018. The
sequential increase in segment profit for the fourth quarter of 2019 was
due to a few factors, including cost reduction initiatives and a
slightly larger deficiency payment from Devon related to a minimum
volume commitment (MVC) expiring on December 31, 2020.
-- Average natural gas gathering and transportation volumes for the fourth
quarter of 2019 were approximately 4% lower as compared to the third
quarter of 2019 and approximately 2% higher as compared to the fourth
quarter of 2018. Average natural gas processing volumes for the fourth
quarter of 2019 decreased approximately 5% and 2% when compared to the
third quarter of 2019 and the fourth quarter of 2018, respectively.
-- Average crude gathering volumes for the fourth quarter of 2019 were
approximately 22% lower as compared to the third quarter of 2019 and
approximately 92% higher as compared to the fourth quarter of 2018. The
year-over-year growth is attributable to new well connections during the
first half of 2019. The sequential decline reflects the lack of crude
gathering well connections during the second half of 2019.
-- Segment profit for full-year 2020 is expected to range from $435 million
to $455 million, remaining relatively unchanged as compared to full-year
2019 results. Annual average daily volumes for 2020 are expected to
decline as compared to 2019.
-- Oklahoma is expected to account for approximately 35% of EnLink's total
segment profit in 2020, with approximately 10% of total capital
expenditures expected to be allocated to Oklahoma. EnLink has been
successful in reducing capital spend per natural gas well connection in
Oklahoma and in 2020, EnLink forecasts per well capital for connections
to EnLink's natural gas system to be roughly 60% less than similar costs
incurred during 2018. EnLink's active producer mix in Oklahoma is also
evolving, whereby approximately 70% of well connections in 2020 are
forecasted to be driven by activity with regional producers as compared
to approximately 70% of 2019 well connections being with multibasin
producers. With steady segment profit forecasted for 2020, coupled with
a significant decrease in capital expenditures, Oklahoma is expected to
generate significant segment free cash flow during 2020.
North Texas:
-- Segment profit of $72.1 million for the fourth quarter of 2019 was
approximately 4% higher as compared to the third quarter of 2019, driven
by successful cost reduction initiatives and margin improvements.
Segment profit for the fourth quarter of 2019 was approximately 25%
lower as compared to the fourth quarter of 2018 due to the expiration of
MVCs with Devon on December 31, 2018. Results for the fourth quarter of
2018 include approximately $23 million of MVC payments, representing 24%
of segment profit. Excluding MVC payments, segment profit for the fourth
quarter of 2018 is in line with the fourth quarter of 2019.
-- Average natural gas gathering and transportation volumes for the fourth
quarter of 2019 were relatively unchanged as compared to the third
quarter of 2019 and approximately 5% lower as compared to the fourth
quarter of 2018. Average natural gas processing volumes for the fourth
quarter of 2019 decreased approximately 3% as compared to the third
quarter of 2019 and remained relatively unchanged as compared to the
fourth quarter of 2018.
-- Segment profit for full-year 2020 is expected to range from $240 million
to $260 million. The reduction in forecasted 2020 segment profit as
compared to full-year 2019 results of $289 million is due to volume
declines in this mature basin, along with changes in business mix and
the reduction in processing fees charged to BKV Oil and Gas Capital
Partners (BKV) as they transition into Devon's ownership position during
the second quarter of 2020. The reduction in processing fees is expected
to be more than offset by value chain enhancements to EnLink's Louisiana
NGL business.
-- North Texas is expected to account for 20% of EnLink's total segment
profit in 2020, with less than 5% of total capital expenditures expected
to be allocated to related operations. North Texas is expected to
generate significant segment free cash flow during 2020.
2019 Sustainability Report
EnLink will post its 2019 Sustainability Report in May 2020 in the Sustainability section of EnLink's website at www.EnLink.com.
Fourth Quarter and Full-Year 2019 Earnings Call Details
EnLink will host a webcast and conference call on Wednesday, February 26, at 9 a.m. Central time to discuss its fourth quarter and full-year results. 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/10137406. Here, they will receive their 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, distributable cash flow available to common unitholders (distributable cash flow), excess free cash flow, and segment free cash flow all as defined below:
We define adjusted EBITDA as net income (loss) plus interest expense, net of interest income; income tax expense (benefit); depreciation and amortization; impairments; loss on secured term loan receivable; distributions from unconsolidated affiliate investments; (gain) loss on disposition of assets; unit-based compensation; transaction costs; (income) loss from unconsolidated affiliate investments; (gain) loss on non-cash derivatives; and accretion expense associated with asset retirement obligations; less non-cash revenue from contract restructuring; gain on extinguishment of debt; payments under onerous performance obligation; non-cash rent; and non-controlling interest.
We define distributable cash flow as adjusted EBITDA (defined above, net to ENLC), less interest expense, loss (gain) on settlement of 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 ("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.
Excess free cash flow is defined as distributable cash flow less distributions declared on common units and growth capital expenditures, which are net to EnLink after giving effect to the contributions by other entities related to the non-controlling interest share of our consolidated entities.
Segment Free Cash Flow is defined as segment profit less growth and maintenance capital expenditures, which are gross to EnLink prior to giving effect to the contributions by other entities related to the non-controlling interest share of our consolidated entities.
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.
Adjusted EBITDA, distributable cash flow, excess free cash flow and segment free 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.
Other definitions and explanations of terms used in this press release:
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.
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.
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, 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 or rig activity, future cost savings, profitability, financial metrics, operating efficiencies and other benefits of cost savings or operational initiatives, our future capital structure and credit ratings, 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 affect our financial condition, results of operations and 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) the effects of existing and future laws and governmental regulations, including legislation or regulation relating to hydraulic fracturing or climate change or other environmental matters, (m) operating hazards, natural disasters, weather-related issues or delays, casualty losses, and other matters beyond our control, and (n) impairments to goodwill, long-lived assets and equity method investments. These and other applicable uncertainties, factors, and risks are described more fully in EnLink Midstream, LLC's and EnLink Midstream Partners, LP's filings with the Securities and Exchange Commission, including EnLink Midstream, LLC's and EnLink Midstream Partners, LP's Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, and Current Reports on Form 8-K. Neither EnLink Midstream, LLC nor EnLink Midstream Partners, LP 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 and Tax, 214-721-9696, kate.walsh@enlink.com
Media Relations: Jill McMillan, Vice President of Strategic Relations & Public 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
Year Ended
December 31,
December 31,
2019 2018 2019 2018
---
Total revenues $
1,155.7 $
2,058.3 $
6,052.9 $
7,699.0
Cost of sales 729.5 1,604.3 4,392.5 6,008.0
Gross operating margin 426.2 454.0 1,660.4 1,691.0
Operating costs and expenses:
Operating expenses 115.5 116.1 467.1 453.4
General and
administrative 30.5 40.5 152.6 140.3
(Gain) loss on
disposition of assets 1.0 (0.9) (1.9) 0.4
Depreciation and
amortization 153.9 147.2 617.0 577.3
Impairments 947.0 341.2 1,133.5 365.8
Loss on secured term
loan receivable - 52.9
Total operating costs
and expenses, excluding
cost of sales 1,247.9 644.1 2,421.2 1,537.2
Operating income (loss) (821.7) (190.1) (760.8) 153.8
Other income (expense):
Interest expense, net of
interest income (55.5) (48.0) (216.0) (182.3)
Income (loss) from
unconsolidated
affiliates (30.8) 1.6 (16.8) 13.3
Other income 0.8 0.3 0.9 0.6
Total other expense (85.5) (46.1) (231.9) (168.4)
Loss before non-
controlling interest
and income taxes (907.2) (236.2) (992.7) (14.6)
Income tax expense (4.2) (0.9) (6.9) (18.2)
Net loss (911.4) (237.1) (999.6) (32.8)
Net income (loss)
attributable to non-
controlling interest 27.3 (175.8) 119.7 (19.6)
ENLC interest in net
loss $
(938.7) $
(61.3) $
(1,119.3) $
(13.2)
Net loss attributable to ENLC per unit:
Basic common unit $
(1.92) $
(0.34) $
(2.41) $
(0.07)
Diluted common unit $
(1.92) $
(0.34) $
(2.41) $
(0.07)
EnLink Midstream, LLC
Reconciliation of Net Loss to Adjusted EBITDA
(All amounts in millions)
(Unaudited)
Three Months Ended
Year Ended
December 31,
December 31,
2019 2018 2019 2018
---
Net loss $
(911.4) $
(237.1) $
(999.6) $
(32.8)
Interest expense, net
of interest income 55.5 48.0 216.0 182.3
Depreciation and
amortization 153.9 147.2 617.0 577.3
Impairments 947.0 341.2 1,133.5 365.8
Non-cash revenue from
contract
restructuring (1) - (45.5)
Loss on secured term
loan receivable (1) - 52.9
(Income) loss from
unconsolidated
affiliate investments
(2) 30.8 (1.6) 16.8 (13.3)
Distributions from
unconsolidated
affiliate investments 4.7 6.0 20.2 22.7
(Gain) loss on
disposition of assets 1.0 (0.9) (1.9) 0.4
Unit-based
compensation 8.2 9.3 39.4 41.1
Income tax expense 4.2 0.9 6.9 18.2
(Gain) loss on non-
cash derivatives 4.8 (24.9) 0.1 (10.1)
Payments under onerous
performance
obligation offset to
other current and
long-term
liabilities - (4.4) (9.0) (17.9)
Transaction costs (3) - 5.3 13.9 8.1
Other (4) (0.2) (0.5) (1.0)
Adjusted EBITDA before
non-controlling
interest 298.5 288.5 1,105.2 1,096.3
Non-controlling
interest share of
adjusted EBITDA from
joint ventures (5) (7.6) (5.3) (25.7) (19.1)
Adjusted EBITDA, net
to ENLC $
290.9 $
283.2 $
1,079.5 $
1,077.2
(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
$10.0 million
installment
payment under
the term loan
and filed for
reorganization
under Chapter 11
of the U.S.
Bankruptcy Code.
White Star sold
its assets and
we did not
recover any
amounts then
owed to us under
the second lien
secured term
loan.
(2) Includes a loss
of $31.4 million
for the three
months and year
ended December
31, 2019 related
to an impairment
on the carrying
value of Cedar
Cove Midstream
LLC.
(3) Represents
transaction
costs primarily
attributable to
costs incurred
related to the
acquisition of
all outstanding,
publicly-held
ENLK common
units in January
2019 and costs
we incurred
related to the
acquisition by
GIP of equity
interests in
ENLK, ENLC, and
the managing
member of ENLC
previously held
by subsidiaries
of Devon Energy
Corporation in
July 2018.
(4) Includes
accretion
expense
associated with
asset retirement
obligations and
non-cash rent,
which relates to
lease incentives
pro-rated over
the lease term.
(5) 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.
EnLink Midstream, LLC
Reconciliation of Net Cash Provided by Operating Activities to Adjusted EBITDA
and Distributable Cash Flow
(All amounts in millions except ratios and per unit amounts)
(Unaudited)
Three Months Ended Year Ended
December 31, December 31,
---
2019 2019
---
Net cash provided by
operating activities $
214.4 $
991.9
Interest expense (1) 54.5 213.7
Current income tax
benefit (2.0)
Distributions from
unconsolidated
affiliate investment
in excess of earnings 2.9 3.7
Transaction costs (2) - 13.9
Other (3) (1.5) (3.8)
Changes in operating assets and liabilities
which (provided) used cash:
Accounts receivable,
accrued revenues,
inventories, and
other (9.4) (350.7)
Accounts payable,
accrued product
purchases, and other
accrued liabilities
(4) 39.6 236.5
Adjusted EBITDA before
non-controlling
interest 298.5 1,105.2
Non-controlling
interest share of
adjusted EBITDA from
joint ventures (5) (7.6) (25.7)
Adjusted EBITDA, net
to ENLC 290.9 1,079.5
Interest expense, net
of interest income (55.5) (216.0)
Maintenance capital
expenditures, net to
ENLC (6) (11.4) (45.8)
ENLK preferred unit
accrued cash
distributions (7) (22.8) (91.7)
Other (8) 1.9 (2.2)
Distributable cash
flow $
203.1 $
723.8
Actual declared
distribution to
common unitholders $
92.3 $
508.1
Distribution coverage
2.20x 1.42x
Distributions declared
per ENLC unit $
0.1875 $
1.0325
(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 in January
2019.
(3) Includes accruals
for settled
commodity swap
transactions and
non-cash rent,
which relates to
lease incentives
pro-rated over
the lease term.
(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% share of
adjusted EBITDA
from the
Delaware Basin
JV, Marathon
Petroleum
Corporation's
50.0% 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 $16.8
million and $6.0
million,
respectively,
for the three
months ended
December 31,
2019, and cash
distributions
earned by the
ENLK Series B
Preferred Units
and ENLK Series
C Preferred
Units of $67.7
million and
$24.0 million,
respectively,
for the year
ended December
31, 2019. Cash
distributions to
be paid to
holders of the
ENLK Series B
Preferred Units
and ENLK Series
C Preferred
Units are not
available to
common
unitholders.
Distributable cash flow is not presented for the three months and year ended December 31, 2018 because distributable cash flow was not used as a supplemental liquidity measure by ENLC during 2018. ENLC began using distributable cash flow as a supplemental liquidity measure in 2019 as a result of ENLC's acquisition of all outstanding, publicly-held ENLK common units in January 2019.
EnLink Midstream, LLC
Operating Data
(Unaudited)
Three Months Ended Year Ended
December 31, December 31,
2019 2018 2019 2018
---
Midstream Volumes:
Permian Segment
Gathering and
Transportation
(MMBtu/d) 806,700 593,100 723,400 521,900
Processing (MMBtu/d) 849,500 587,600 771,400 531,700
Crude Oil Handling
(Bbls/d) 122,900 132,200 132,000 124,300
North Texas Segment
Gathering and
Transportation
(MMBtu/d) 1,634,000 1,712,500 1,651,900 1,733,900
Processing (MMBtu/d) 741,200 738,900 750,500 747,400
Oklahoma Segment
Gathering and
Transportation
(MMBtu/d) 1,296,600 1,272,800 1,302,200 1,204,700
Processing (MMBtu/d) 1,252,400 1,269,600 1,276,700 1,195,300
Crude Oil Handling
(Bbls/d) 46,400 24,200 47,300 15,700
Louisiana Segment
Gathering and
Transportation
(MMBtu/d) 2,124,300 2,193,300 2,050,000 2,196,200
Processing (MMBtu/d) 411,100 458,100 400,200 431,200
Crude Oil Handling
(Bbls/d) 19,200 17,000 18,900 15,400
NGL Fractionation
(Gals/d) 7,668,800 6,963,500 7,341,700 6,584,400
Brine Disposal (Bbls/
d) 1,500 3,300 2,700 3,200
EnLink Midstream, LLC
Forward-Looking Reconciliation of Net Income to Adjusted EBITDA and Excess Free Cash Flow (1)
(All amounts in millions)
(Unaudited)
2020 Outlook (1)
($MM) Low Midpoint High
---
Net income of EnLink (2) $
160 $
195 $
230
Interest expense, net of
interest income 220 225 230
Depreciation and
amortization 647 632 618
Income from
unconsolidated
affiliate investments (3) (4) (5)
Distribution from
unconsolidated
affiliate investments 5 7 9
Unit-based compensation 33 37 40
Income taxes 52 53 55
Other (3) (1) (1) (1)
Adjusted EBITDA before
non-controlling
interest $
1,113 $
1,144 $
1,176
Non-controlling
interest share of
adjusted EBITDA (4) (43) (44) (46)
Adjusted EBITDA, net to
EnLink $
1,070 $
1,100 $
1,130
Interest expense, net of
interest income (220) (225) (230)
Current taxes and other (4) (4) (4)
Maintenance capital
expenditures, net to
EnLink (5) (40) (45) (50)
Preferred unit accrued
cash distributions (6) (91) (91) (91)
Distributable cash flow $
715 $
735 $
755
Common distributions
declared (370) (370) (370)
Growth capital
expenditures, net to
EnLink (5) (275) (325) (375)
Excess free cash flow $
70 $
40 $
10
(1) Represents the
forward-looking
net income
guidance of
EnLink
Midstream, LLC
for the year
ended December
31, 2020. 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, 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 Natural
Resources XI,
L.P.'s ("NGP")
49.9% share of
net income from
the Delaware
Basin JV, (ii)
Marathon
Petroleum
Corp.'s
("Marathon") 50%
share of net
income from the
Ascension JV.,
and (iii) other
minor non-
controlling
interests.
(3) 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.
(4) 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.
(5) Excludes capital
expenditures
that are
contributed by
other entities
and relate to
the non-
controlling
interest share
of our
consolidated
entities.
(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 ENLK Series
C Preferred
Units are not
available to
common
unitholders.
EnLink Midstream does not provide a reconciliation of forward-looking Net Cash Provided by Operating Activities to Adjusted EBITDA and Excess Free Cash Flow 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.
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SOURCE EnLink Midstream
