EnLink Midstream Reports Fourth Quarter and Full-Year 2020 Results, Provides 2021 Financial Guidance
DALLAS, Feb. 16, 2021 /PRNewswire/ -- EnLink Midstream, LLC (NYSE: ENLC) (EnLink) today reported financial results for the fourth quarter and full-year of 2020 and provided 2021 financial guidance.
Highlights:
-- Reported a net loss and positive net cash provided by operations for the
fourth quarter of 2020 and full-year 2020.
-- Exceeded the high end of 2020 guidance for both adjusted EBITDA and free
cash flow after distributions.
-- Achieved approximately 29% growth in Permian segment profit for fourth
quarter of 2020 as compared to fourth quarter of 2019.
-- Reduced leverage to 4.1x for 2020 and ended the year with an undrawn
$1.75 billion credit facility.
"EnLink achieved stable and resilient results for the fourth quarter of 2020 and throughout the past year, driven by our diversified asset platform and the team's relentless focus on execution," said Barry E. Davis, EnLink Chairman and Chief Executive Officer. "Despite the challenges of the past year, I am proud of the significant and swift actions our team took to position EnLink financially and operationally for long-term success, while maintaining our steadfast commitment to deliver best-in-class services reliably and safely."
"Our large-scale, diversified platform generates significant, stable cash flows from our two growth segments in the Permian and Louisiana, our leading STACK position in Oklahoma, and our more mature asset base in North Texas. The Permian continues to drive near-term growth, with producers remaining active on our footprint, while our Louisiana system provides long-term growth opportunities as the Gulf Coast market grows.
"We are confident that the financial strength of our platform, combined with our unwavering focus on being a leader in midstream innovation and efficiency, will deliver superior returns for investors. In 2021 and beyond, one of our key focus areas will be to improve the sustainability of our business. We are already well positioned within the midstream space, with approximately 90% of our segment profit generated from natural gas and NGL services. However, there is more work to be done here, and we will continue to reduce and offset emissions, as well as increasingly integrate additional clean energy sources into how we fuel our own business."
Adjusted EBITDA and free cash flow after distributions (FCFAD) 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 2020 Results
$MM, unless noted Fourth Full-Year
Quarter 2020
2020
--- ---
Net
(Loss) (124) (316)
Adjusted
EBITDA,
net to
EnLink 262 1,039
Net
Cash
Provided
by
Operating
Activities 170 731
Total
Capital
Expenditures,
net to
EnLink 33 219
Free
Cash
Flow
After
Distributions 92 311
---
Debt to Adjusted EBITDA, net to
EnLink* at December 31, 2020
4.1x
Common
Units
Outstanding
at
February
11,
2021 490,048,405
*Calculated according to credit facility leverage covenant, which excludes cash on the balance sheet.
-- The net loss reported for the fourth quarter of 2020 was driven by an
income tax expense of $159 million as a result of recording a valuation
allowance related to deferred income tax assets.
-- Strong adjusted EBITDA generation throughout the year, with 2020 results
exceeding the high end of the previously disclosed guidance range of
$1.025 billion. The Permian delivered significant year-over-year segment
profit growth of 29% due to key producer customers remaining active
across our footprint through the cycle. All segments benefited from
company wide cost reduction efforts, which removed approximately 23% of
operating and general and administrative costs from EnLink's structure
when compared to 2019.
-- Total capital expenditures for 2020 came in at the midpoint of the
previously disclosed guidance range, representing a 65% decrease from
2019.
-- Strong free cash flow resulted in a significant reduction of debt, and
we ended the year with a leverage ratio of 4.1x. In addition, we repaid
$500 million of our $850 million term loan, which matures in December of
2021, with proceeds from the Senior Unsecured Notes offering we
completed in December. We ended the year with no borrowings on our $1.75
billion revolving credit facility and $350 million of prepayable term
loan balance.
-- FCFAD exceeded the high end of the previously disclosed guidance range,
with strong execution, cost control, and capital discipline adding to
the bottom line. Cash flow in the fourth quarter was adversely impacted
by a $10.9 million payment to unwind out-of-the money interest rate
hedges associated with the portion of the term loan we repaid in
December 2020.
2021 Financial Guidance
$MM, unless noted 2021 Guidance
---
Net Income (1)
45 - 105
Adjusted EBITDA, net to EnLink
940 - 1,000
Capex, net to EnLink, & Plant
Relocation Costs
140 - 180
Growth Capex, net to EnLink, &
Plant Relocation Costs
105 - 135
Maintenance Capex, net to EnLink
35 - 45
Free Cash Flow After
Distributions
275 - 325
Debt to Adjusted EBITDA, net to
EnLink(2)
4.2x - 4.4x
Annualized 4Q20 Declared
Distribution per Common Unit
$0.375/unit
____________________________
(1)
Net income is before non-controlling interest.
(2)
Calculated according to credit facility leverage covenant, which excludes cash on the balance sheet.
-- Adjusted EBITDA, net to EnLink, for 2021 is forecasted to be roughly
flat compared to 2020, when excluding the $56 million of minimum volume
commitment (MVC) deficiency payments received from Devon Energy Corp.
during 2020. 2020 was the last year for payments under the MVC with
Devon and this represents the last significant MVC deficiency roll-off
in EnLink's portfolio. Growth in the Permian segment, along with
stability in the Louisiana segment, are expected to largely offset
reduced volumes in Oklahoma and natural basin decline in North Texas.
-- Capital expenditures scheduled for 2021 are predominantly related to
highly efficient well connect capital projects, and wells are projected
to be connected fairly evenly throughout the year. The main expansion
project, "Project War Horse," is the relocation of an underutilized
natural gas processing plant from Oklahoma to the Midland Basin. This
project, which will expand Midland gas processing capacity by 80 million
cubic feet per day (MMcf/d), is expected to cost approximately $30
million (of which $25 million is considered operating expense for GAAP
purposes), representing savings of approximately 65% as compared to the
cost of a newbuild.
-- FCFAD for 2021 is forecasted to be strong, with all four segments
contributing substantially throughout the year.
-- Debt-to-adjusted EBITDA is forecasted to be in the range of 4.2x to 4.4x
for 2021, as calculated under the terms of EnLink's credit facility.
EnLink's long-term leverage target of below 4.0x remains unchanged.
Segment Updates
Permian:
-- Segment profit of approximately $48 million for the fourth quarter of
2020 was approximately 3% higher as compared to the third quarter of
2020 and approximately 29% higher as compared to the fourth quarter of
2019. Growth over the third quarter of 2020 was driven largely by
increased crude gathering volumes on EnLink's systems, coupled with
strength in ethane and natural gas prices. Significant growth over the
fourth quarter of 2019 was driven predominantly by the stable rig
activity EnLink experienced, primarily on EnLink's natural gas system in
the Midland Basin. The consistency of active rigs on EnLink's dedicated
acreage translated into growth in natural gas gathered volumes and
resiliency in processed volumes.
-- Average natural gas gathering volumes for the fourth quarter of 2020
were approximately flat as compared to the third quarter of 2020 and
approximately 16% higher as compared to the fourth quarter of 2019.
Average natural gas processing volumes for the fourth quarter of
2020 decreased by approximately 2% and increased by approximately 7%
as compared to the third quarter of 2020 and the fourth quarter of
2019, respectively. EnLink continues to benefit from strong producer
drilling activity on its Permian footprint, and with a record
inventory level of drilled but uncompleted wells available for
completion, significant volume growth is expected throughout 2021.
-- Average crude oil handling volumes for the fourth quarter of 2020
increased by approximately 21% as compared to the third quarter of
2020 and were approximately 2% lower as compared to the fourth
quarter of 2019. The sequential increase was primarily driven by a
rebound in gathered volumes, which were negatively impacted
throughout 2020 as a result of crude price volatility. A more stable
crude price environment is expected to drive crude volume growth in
the Permian segment.
-- Project War Horse, as discussed above, is a low-cost, high-return
natural gas plant expansion in the Midland, Texas, where EnLink plans to
relocate an underutilized plant from Oklahoma. The relocation is
expected to cost approximately $30 million and is expected to add
approximately 80 MMcf/d of natural gas processing capacity. The
relocation is expected to be completed during the second half of 2021.
-- Segment profit for 2021 is expected to range from $190 million to $230
million, with growth over full-year 2020 expected to be driven primarily
by strong producer activity in the Midland Basin.
-- The Permian is expected to account for approximately 20% of EnLink's
total segment profit during 2021. Given the pace of well connects
projected for EnLink's Permian system, EnLink expects to allocate
approximately 56% of total capital expenditures to Permian projects.
This amount includes costs related to Project War Horse, the plant
relocation from Oklahoma to Midland, for which the majority are treated
as operating expenses for GAAP purposes.
-- EnLink has limited exposure to production on federal land, with exposure
isolated to the New Mexico portion of the Permian's Delaware Basin.
Approximately 4% of EnLink's forecasted 2021 total segment profit, net
to EnLink, is connected to production on federal land. Based on customer
discussions, we do not expect any significant near-term impact from
recent Executive Orders from the Biden Administration.
Louisiana:
-- Segment profit of approximately $88 million for the fourth quarter of
2020 was approximately 27% higher as compared to the third quarter of
2020 and approximately 2% higher as compared to the fourth quarter of
2019. The significant sequential increase in segment profit was driven
by regular seasonal tailwinds and enhancements to our natural gas
liquids (NGLs) business following the acquisition of Devon's North Texas
assets by BKV Oil and Gas Capital Partners.
-- Average NGL fractionation volumes for the fourth quarter of 2020
were roughly flat as compared to the third quarter of 2020, and down
3% as compared to the fourth quarter of 2019.
-- Average natural gas transportation volumes for the fourth quarter of
2020 were approximately 7% higher as compared to the third quarter
of 2020 and roughly flat as compared to the fourth quarter of 2019.
-- Average crude volumes on EnLink's Ohio River Valley system for the
fourth quarter of 2020 were approximately 21% higher as compared to
the third quarter of 2020 and flat as compared to the fourth quarter
of 2019. Volumes rebounded during the fourth quarter of 2020 after
being impacted by refinery cuts related to pandemic-driven demand
deterioration.
-- Segment profit for 2021 is forecasted to range from $290 million to $320
million, which is generally in line with 2020 results. EnLink's
commercial arrangement with Venture Global's Calcasieu Pass LNG facility
has begun, and the sub-segment is expected to benefit from strong,
consistent natural gas demand throughout 2021. The growth in EnLink's
natural gas subsegment is expected to be somewhat offset by a lower
quarterly run-rate in the Ohio River Valley subsegment and slightly
muted results in the NGL subsegment as a result of near-term excess
fractionation capacity in the Gulf Coast market.
-- Louisiana is projected to account for approximately 30% of EnLink's
total segment profit in 2021, with approximately 16% of total capital
expenditures forecasted to be allocated to Louisiana operations.
Oklahoma:
-- Segment profit of approximately $104 million for the fourth quarter of
2020 was approximately 4% lower as compared to the third quarter of 2020
and approximately 11% lower as compared to the fourth quarter of 2019.
The sequential and year-over-year decreases in segment profit are due to
reduced activity in Oklahoma's STACK play as a result of the commodity
price environment.
-- Average natural gas gathering volumes for the fourth quarter of 2020
were approximately 7% lower as compared to the third quarter of 2020
and approximately 20% lower as compared to the fourth quarter of
2019.
-- Average natural gas processing volumes for the fourth quarter of
2020 decreased approximately 6% and 15% when compared to the third
quarter of 2020 and the fourth quarter of 2019, respectively.
-- Both segment profit and volume for the fourth quarter of 2020 were
adversely impacted by an extended severe ice storm.
-- Segment profit for 2021 is projected to range from $295 million to $325
million, which represents a 25% decrease (using the midpoint) from 2020
due in large part to the expiration of a significant MVC which had
deficiency payments associated with it. This is the last significant MVC
deficiency in EnLink's portfolio. The remainder of the decrease is
related to lower volumes as a result of reduced drilling activity on
EnLink's footprint during 2020. We are forecasting to receive the first
volumes from the Devon and Dow Inc. joint venture in the second half of
2021, thus post-2021, EnLink will benefit from volumes related to the
joint venture's activity.
-- Oklahoma is expected to account for approximately 30% of EnLink's total
segment profit in 2021, with approximately 13% of total capital
expenditures forecasted to be allocated to Oklahoma.
North Texas:
-- Segment profit of $62 million for the fourth quarter of 2020 was
approximately 7% lower as compared to the third quarter of 2020 and
approximately 14% lower as compared to the fourth quarter of 2019.
Results for the fourth quarter of 2020 reflect a reduction to processing
fees charged to BKV, as compared to what was charged to Devon, in
exchange for NGL enhancements realized in the NGL business.
-- Average natural gas gathering volumes for the fourth quarter of 2020
were lower by approximately 4% as compared to the third quarter of
2020 and approximately 14% lower as compared to the fourth quarter
of 2019.
-- Average natural gas processing volumes for the fourth quarter of
2020 decreased by approximately 4% as compared to the third quarter
of 2020 and decreased by approximately 13% as compared to the fourth
quarter of 2019.
-- Segment profit for 2021 is expected to range from $220 million to $240
million. The decrease in forecasted 2021 segment profit as compared to
2020 results is due to volume decline in this mature basin, along with a
full year of the reduction in processing fees charged to BKV in exchange
for value chain enhancements to EnLink's Louisiana NGL business, which
we expect will more than offset the processing fee discount.
-- North Texas is expected to account for approximately 20% of EnLink's
total segment profit in 2021, with approximately 12% of total capital
expenditures expected to be allocated to North Texas operations.
2020 Sustainability Report
EnLink will post its 2020 Sustainability Report in May 2021 in the Sustainability section of EnLink's website at www.EnLink.com.
Fourth Quarter, Full-Year 2020 Earnings Call Details
EnLink will host a webcast and conference call on Wednesday, February 17, at 8 a.m. Central time to discuss its fourth quarter and full-year results, along with 2021 financial guidance. 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 https://dpregister.com/sreg/10151402/e0cd7c4250. 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
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 free cash flow after distributions, all as defined below:
Adjusted EBITDA is defined as net income (loss) plus (less) interest expense, net of interest income; depreciation and amortization; impairments; loss on secured term loan receivable, (income) loss from unconsolidated affiliate investments; distributions from unconsolidated affiliate investments; (gain) loss on disposition of assets; (gain) loss on extinguishment of debt; unit-based compensation; income tax expense (benefit); unrealized (gain) loss on commodity swaps; (payments under onerous performance obligation); transaction costs; relocation costs associated with the War Horse processing facility; accretion expense associated with asset retirement obligations; (non-cash rent); and (non-controlling interest share of adjusted EBITDA from joint ventures).
Distributable cash flow is defined as adjusted EBITDA, net to ENLC, plus (less) (interest expense, net of interest income); (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); (accrued cash distributions on Series B Preferred Units and Series C Preferred Units paid or expected to be paid); (payments to terminate interest rate swaps); non-cash interest (income)/expense; and (current income taxes).
Free cash flow after distributions is defined as distributable cash flow plus (less) (distributions declared on common units); (growth capital expenditures, excluding growth capital expenditures that were contributed by other entities and relate to the non-controlling interest share of our consolidated joint ventures); proceeds from the sale of equipment and land; and (relocation costs associated with the War Horse processing facility).
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 and free cash flow after distributions, 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) increasing scrutiny and changing expectations from stakeholders with respect to our environment, social and governance practices, (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 filings with the Securities and Exchange Commission, including EnLink Midstream, LLC's Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, and Current Reports on Form 8-K. EnLink Midstream, LLC assumes no 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 & 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,
---
2020 2019 2020 2019
---
Total revenues $
1,064.3 $
1,155.7 $
3,893.8 $
6,052.9
Operating costs and expenses:
Cost of sales, exclusive of operating expenses and 686.0 729.5 2,388.5 4,392.5
depreciation and amortization (1)(2)
Operating expenses 90.7 115.5 373.8 467.1
Depreciation and amortization 157.3 153.9 638.6 617.0
Impairments 8.3 947.0 362.8 1,133.5
Gain (loss) on disposition of assets 6.0 1.0 8.8 (1.9)
General and administrative 23.7 30.5 103.3 152.6
Loss on secured term loan receivable - 52.9
Total operating costs and expenses 972.0 1,977.4 3,875.8 6,813.7
Operating income (loss) 92.3 (821.7) 18.0 (760.8)
Other income (expense):
Interest expense, net of interest income (57.0) (55.5) (223.3) (216.0)
Gain on extinguishment of debt - 32.0
Income (loss) from unconsolidated affiliates (0.2) (30.8) 0.6 (16.8)
Other income (loss) (0.1) 0.8 0.3 0.9
Total other expense (57.3) (85.5) (190.4) (231.9)
Income (loss) before non-controlling interest and income 35.0 (907.2) (172.4) (992.7)
taxes
Income tax expense (159.2) (4.2) (143.2) (6.9)
Net loss (124.2) (911.4) (315.6) (999.6)
Net income attributable to non-controlling interest 27.2 27.3 105.9 119.7
ENLC interest in net loss $
(151.4) $
(938.7) $
(421.5) $
(1,119.3)
Net loss attributable to ENLC per unit:
Basic common unit $
(0.31) $
(1.92) $
(0.86) $
(2.41)
Diluted common unit $
(0.31) $
(1.92) $
(0.86) $
(2.41)
__________________________
(1) Includes related party cost of
sales of $2.5 million and $3.7
million for the three months ended
December 31, 2020 and 2019,
respectively, and excludes all
operating expenses as well as
depreciation and amortization
related to our operating segments
of $155.8 million and $151.6
million for the three months ended
December 31, 2020 and 2019,
respectively.
(2) Includes related party cost of
sales of $8.7 million and $21.7
million for the years ended
December 31, 2020 and 2019,
respectively, and excludes all
operating expenses as well as
depreciation and amortization
related to our operating segments
of $631.3 million and $608.6
million for the years ended
December 31, 2020 and 2019,
respectively.
EnLink Midstream, LLC
Reconciliation of Net Loss to Adjusted EBITDA
(All amounts in millions)
(Unaudited)
Three Months Ended
Year Ended
December 31,
December 31,
---
2020 2019 2020 2019
---
Net loss $
(124.2) $
(911.4) $
(315.6) $
(999.6)
Interest expense, net of interest income 57.0 55.5 223.3 216.0
Depreciation and amortization 157.3 153.9 638.6 617.0
Impairments 8.3 947.0 362.8 1,133.5
Loss on secured term loan receivable (1) - 52.9
(Income) loss from unconsolidated affiliate investments (2) 0.2 30.8 (0.6) 16.8
Distributions from unconsolidated affiliate investments 0.1 4.7 2.1 20.2
(Gain) loss on disposition of assets 6.0 1.0 8.8 (1.9)
Gain on extinguishment of debt - (32.0)
Unit-based compensation 3.8 8.2 28.4 39.4
Income tax expense 159.2 4.2 143.2 6.9
Unrealized loss on commodity swaps 2.5 4.8 10.5 0.1
Payments under onerous performance obligation offset to - (9.0)
other current and long-term liabilities
Transaction costs (3) - 13.9
Relocation costs associated with the War Horse processing 0.8 0.8
facility (4)
Other (5) (0.3) (0.2) (1.1) (1.0)
Adjusted EBITDA before non-controlling interest 270.7 298.5 1,069.2 1,105.2
Non-controlling interest share of adjusted EBITDA from joint (8.9) (7.6) (30.7) (25.7)
ventures (6)
Adjusted EBITDA, net to ENLC $
261.8 $
290.9 $
1,038.5 $
1,079.5
___________________________
(1) In May 2018, we restructured our
natural gas gathering and
processing contract with White
Star, and, as a result, recognized
the discounted present value of a
secured term loan receivable
granted to us by White Star. We
recorded a $52.9 million loss in
our consolidated statement of
operations for the year ended
December 31, 2019 related to the
write-off of the secured term
loan receivable.
(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 EnLink Midstream
Partners, LP ("ENLK") common units
in January 2019.
(4) Project War Horse includes
operating expenses incurred
related to the relocation of
equipment and facilities from the
Battle Ridge processing plant, in
the Oklahoma segment, to the
Permian segment that we expect to
complete in 2021 and are not part
of our ongoing operations.
(5) Includes accretion expense
associated with asset retirement
obligations and non-cash rent,
which relates to lease incentives
pro-rated over the lease term.
(6) 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, Distributable Cash Flow, and Free Cash Flow After Distributions
(All amounts in millions except ratios and per unit amounts)
(Unaudited)
Three Months Ended
Year Ended
December 31, December 31,
---
2020 2019 2020 2019
---
Net cash provided by operating activities $
170.1 $
214.4 $
731.1 $
991.9
Interest expense (1) 54.9 54.5 218.2 213.7
Payments to terminate interest rate swaps (2) 10.9 10.9
Accruals for settled commodity swap transactions (5.0) (1.4) (4.3) (2.4)
Current income tax expense (benefit) - (2.0) 1.1
Distributions from unconsolidated affiliate investment in excess of 0.1 2.9 0.5 3.7
earnings
Transaction costs (3) - 13.9
Relocation costs associated with the War Horse processing facility (4) 0.8 0.8
Other (5) (0.1) (0.1) (0.3) (1.4)
Changes in operating assets and liabilities which (provided) used cash:
Accounts receivable, accrued revenues, inventories, and other 79.0 (9.4) 6.4 (350.7)
Accounts payable, accrued product purchases, and other accrued (40.0) 39.6 104.8 236.5
liabilities (6)
Adjusted EBITDA before non-controlling interest 270.7 298.5 1,069.2 1,105.2
Non-controlling interest share of adjusted EBITDA from joint ventures (7) (8.9) (7.6) (30.7) (25.7)
Adjusted EBITDA, net to ENLC 261.8 290.9 1,038.5 1,079.5
Interest expense, net of interest income (57.0) (55.5) (223.3) (216.0)
Maintenance capital expenditures, net to ENLC (8) (11.2) (11.4) (32.1) (45.8)
ENLK preferred unit accrued cash distributions (9) (22.9) (22.8) (91.4) (91.7)
Payments to terminate interest rate swaps (2) (10.9) (10.9)
Other (10) 0.2 1.9 (0.9) (2.2)
Distributable cash flow 160.0 203.1 679.9 723.8
Common distributions declared (46.7) (92.3) (186.0) (508.1)
Growth capital expenditures, net to ENLC (8) (21.3) (88.9) (187.2) (599.8)
Proceeds from the sale of equipment and land (11) 0.4 0.5 4.6 8.2
Relocation costs associated with the War Horse processing facility (4) (0.8) (0.8)
Free cash flow after distributions $
91.6 $
22.4 $
310.5 $
(375.9)
Actual declared distribution to common unitholders $
46.7 $
92.3 $
186.0 $
508.1
Distribution coverage 3.43x 2.20x 3.66x 1.42x
Distributions declared per ENLC unit $
0.09375 $
0.1875 $
0.375 $
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/
(expense), which is netted against
interest expense but not included in
adjusted EBITDA.
(2) Represents cash paid for the early
termination of $500.0 million of our
interest rate swaps due to the partial
repayment of EnLink's $850 million term
loan in December 2020.
(3) Represents transaction costs primarily
attributable to costs incurred related to
the acquisition of all outstanding,
publicly-held ENLK common units in
January 2019.
(4) Project War Horse includes operating
expenses incurred related to the
relocation of equipment and facilities
from the Battle Ridge processing plant, in
the Oklahoma segment, to the Permian
segment that we expect to complete in 2021
and are not part of our ongoing
operations.
(5) Includes amortization of designated cash
flow hedge and non-cash rent, which
relates to lease incentives pro-rated
over the lease term.
(6) Net of payments under onerous performance
obligation offset to other current and
long-term liabilities during the year
ended December 31, 2019.
(7) 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.
(8) Excludes capital expenditures that were
contributed by other entities and relate
to the non-controlling interest share of
our consolidated entities.
(9) Represents the cash distributions earned by
the ENLK Series B Preferred Units and ENLK
Series C Preferred Units, which are not
available to common unitholders.
(10) Includes non-cash interest
(income)/expense and current income tax
expense.
(11) Represents proceeds from the sale of
surplus or unused equipment and land.
These sales occurred in the normal
operation of our business and did not
include major divestitures.
EnLink Midstream, LLC
Operating Data
(Unaudited)
Three Months Ended Year Ended
December 31,
December 31,
---
2020 2019 2020 2019
---
Midstream Volumes:
Permian Segment
Gathering and Transportation (MMBtu/d) 936,400 806,700 890,800 723,400
Processing (MMBtu/d) 907,800 849,500 899,000 771,400
Crude Oil Handling (Bbls/d) 120,300 122,900 116,200 132,000
Louisiana Segment
Gathering and Transportation (MMBtu/d) 2,096,800 2,124,300 1,993,900 2,050,000
Crude Oil Handling (Bbls/d) 19,000 19,200 16,900 18,900
NGL Fractionation (Gals/d) 7,403,300 7,668,800 7,597,800 7,341,700
Brine Disposal (Bbls/d) 1,200 1,500 1,300 2,700
Oklahoma Segment
Gathering and Transportation (MMBtu/d) 1,039,500 1,296,600 1,116,500 1,302,200
Processing (MMBtu/d) 1,061,800 1,252,400 1,105,900 1,276,700
Crude Oil Handling (Bbls/d) 22,700 46,400 28,700 47,300
North Texas Segment
Gathering and Transportation (MMBtu/d) 1,399,400 1,634,000 1,478,200 1,651,900
Processing (MMBtu/d) 645,100 741,200 671,000 750,500
EnLink Midstream, LLC
Forward-Looking Reconciliation of Net Income to Adjusted EBITDA and Free Cash Flow After Distributions
(All amounts in millions)
(Unaudited)
2021 Outlook
(1)
($MM) Midpoint
Net income of EnLink Midstream, LLC (2) $
75.0
Interest expense, net of interest income 242.0
Depreciation and amortization 604.0
Income from unconsolidated affiliate investments (2.0)
Distributions from unconsolidated affiliate investments 1.0
Unit-based compensation 31.0
Income taxes 30.0
Project War Horse (3) 25.0
Other (4) (1.0)
Adjusted EBITDA before non-controlling interest 1005.0
Non-controlling interest share of adjusted EBITDA (5) (35.0)
Adjusted EBITDA, net to EnLink Midstream, LLC 970.0
Interest expense, net of interest income (242.0)
Maintenance capital expenditures, net to ENLK (6) (40.0)
Preferred unit accrued cash distributions (7) (92.0)
Other (8) 10.0
Distributable cash flow 606.0
Common distributions declared (186.0)
Growth capital expenditures, net to EnLink and Project War Horse (3)(6) (120.0)
Free cash flow after distributions $
300.0
___________________________
(1) Represents the forward-looking net income
guidance of EnLink Midstream, LLC for the
year ended December 31, 2021. 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, the
financial effects of future acquisitions,
and proceeds from the sale of equipment.
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) Project War Horse includes operating
expenses incurred related to the
relocation of equipment and facilities
from the Battle Ridge processing plant,
in the Oklahoma segment, to the Permian
segment that we expect to complete in
2021 and are not part of our ongoing
operations.
(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 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
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.
(8) Includes non-cash interest (income)/
expense and current tax income/
(expense).
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. For the same reasons, EnLink is unable to address the probable significance of the unavailable information, which could be material to future results.
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SOURCE EnLink Midstream, LLC
