EnLink Midstream Reports Fourth Quarter and Full-Year 2017 Results, Reaffirms 2018 Guidance, and Provides Operational Update

DALLAS, Feb. 20, 2018 /PRNewswire/ -- The EnLink Midstream companies (EnLink), EnLink Midstream Partners, LP (NYSE: ENLK) (the Partnership or ENLK) and EnLink Midstream, LLC (NYSE: ENLC) (the General Partner or ENLC), today reported results for the fourth quarter and full-year 2017, and provided an operational update.

Highlights:

• Met or exceeded guidance metrics for fourth quarter and full-year 2017 guidance
• Reaffirmed ENLC and ENLK 2018 financial and operational guidance released on February 6, 2018
• Achieved strong volume increases across core growth regions throughout 2017, including Central Oklahoma, the Delaware Basin, the Midland Basin and the Louisiana Gulf Coast
• Completed construction and placed into service strategic development projects during 2017, including:
• Chisholm II and III facilities in Central Oklahoma
• Lobo II expansion in the Delaware Basin
• Greater Chickadee crude oil gathering system in the Midland Basin
• Ascension Pipeline in southeast Louisiana
• Resumed distribution growth at ENLC beginning with fourth quarter 2017 declared distribution; announced expectation for distribution growth of approximately five percent in declared distributions for full-year 2018 over full-year 2017

"Our fourth quarter performance caps off a very strong year for EnLink," said Michael J. Garberding, EnLink President and Chief Executive Officer. "Our team executed tremendously well throughout 2017, resulting in extensions of our footprint, further integration of our systems, improvements in our strong balance sheet position, and solid growth in cash flows.  Our performance in 2017 sets the stage for a strong 2018.

"The industry has been through three years of a downturn, and EnLink's strategic actions have positioned us for continued growth.  We're in the right places with the right partners, and we are executing the right plan, all of which will drive strong results for 2018 and beyond."

EnLink Midstream Partners, LP:  Fourth Quarter and Full-Year 2017 Financial Results

• The Partnership reported net income attributable to ENLK of $75.7 million for the fourth quarter of 2017, and $148.9 million for the full-year 2017.  Net income includes a $24.9 million tax benefit recorded as a result of the recently enacted tax reform law known as the Tax Cuts and Jobs Act.  Comparatively, the Partnership reported a net loss attributable to ENLK of $28.6 million for the fourth quarter of 2016, and $565.2 million for the full-year 2016.  The full-year 2016 net loss was primarily due to a non-cash expense of $566.3 million related to impairments.
• The Partnership achieved $238.7 million of adjusted EBITDA net to ENLK for the fourth quarter of 2017, and achieved $872.8 million for the full-year 2017.  Comparatively, the Partnership achieved $194.7 million of adjusted EBITDA net to ENLK for the fourth quarter of 2016 and $774.6 million for the full-year 2016.  Adjusted EBITDA is a non-GAAP measure and is explained in greater detail under "Non-GAAP Financial Information."
• The Partnership achieved net cash provided by operating activities of $173.5 million for the fourth quarter 2017, and $706.5 million for the full-year 2017.  Comparatively, the Partnership achieved net cash provided by operating activities of $153.4 million for the fourth quarter of 2016, and $662.6 million for the full-year 2016.
• Distributable cash flow was $163.7 million for the fourth quarter of 2017 and $621.1 million for the full-year 2017.  Comparatively, distributable cash flow was $146.3 million for the fourth quarter of 2016 and $607.1 million for the full-year 2016.  Distributable cash flow is a non-GAAP measure and is explained in greater detail under "Non-GAAP Financial Information."
• Distribution coverage was 1.07x for the fourth quarter of 2017, and 1.02x for the full-year 2017.
• Debt to adjusted EBITDA as of December 31, 2017 was 3.58x, compared to 3.70x as of December 31, 2016.
• Growth capital expenditures net to ENLK for the full-year 2017 were approximately $610 million (excluding capitalized interest), in-line with the 2017 guidance range of $505 million to $645 million.
• As of February 14, 2018, there were 350,022,931 ENLK common units outstanding.

EnLink Midstream, LLC:  Fourth Quarter and Full-Year 2017 Financial Results

• The General Partner reported net income attributable to ENLC of $202.6 million for the fourth quarter of 2017 and $212.8 million for full-year 2017.  Net income includes a $210.6 million tax benefit recorded as a result of the Tax Cuts and Jobs Act.  Comparatively, the General Partner reported a net loss attributable to ENLC of $3.9 million for the fourth quarter of 2016 and a 2016 full-year net loss of $460.0 million. As noted above, the net losses were primarily due to non-cash expenses related to impairments.
• The General Partner's cash available for distribution was $58.1 million for the fourth quarter of 2017, and $216.5 million for the full-year 2017.  Comparatively, the General Partner's cash available for distribution was $52.4 million for the fourth quarter of 2016, and $201.7 million for the full-year 2016.  Cash available for distribution is a non-GAAP measure and is explained in greater detail under "Non-GAAP Financial Information."
• Distribution coverage was 1.23x for the fourth quarter of 2017, and 1.16x for full-year 2017.
• Growth capital expenditures net to ENLC for full-year 2017 were approximately $65 million (excluding capitalized interest), in-line with the 2017 guidance range of $60 million to $70 million.
• As of February 14, 2018, there were 180,883,369 ENLC common units outstanding.

Operational Update:

• Oklahoma:
• EnLink's Oklahoma segment achieved growth of more than 40 percent in segment profit and average processing volumes for full-year 2017 as compared to full-year 2016, and average gas gathering and transmission volumes increased by approximately 30 percent. EnLink's Oklahoma segment is expected to achieve approximately 50 percent growth in both average volumes and segment profit for full-year 2018, as compared to full-year 2017.
• EnLink increased gas processing capacity at its Chisholm complex in Central Oklahoma by 400 million cubic feet per day (MMcf/d) during 2017. With these completed expansions, EnLink now operates 1 billion cubic feet per day (Bcf/d) of processing capacity in Central Oklahoma, and remains one of the largest full-service midstream providers in the STACK.  EnLink's previously announced plans to construct the Thunderbird plant, will add 200 MMcf/d of processing capacity in Central Oklahoma.  The Thunderbird facility is expected to be operational during the first quarter of 2019.
• The construction of EnLink's previously announced Black Coyote crude oil gathering system is progressing well, and is expected to be completed during the first quarter of 2018.  Once the Black Coyote system is operational, EnLink will generate revenue by serving the full range of products produced by Devon Energy's multi-zone large-scale developments, including natural gas, natural gas liquids (NGL) and crude oil. 
• Midland Basin:
• EnLink's Midland Basin natural gas system, achieved 15 percent growth in average volumes for the full-year 2017, as compared to full-year 2016. EnLink expects additional volume growth on its system, as producer customers are expected to bring large scale developments on-line during 2018, resulting in average volume growth of around 40 percent for full-year 2018 as compared to full-year 2017. EnLink expects to achieve around 80 percent processing capacity utilization of its processing capacity by the end of 2018.
• EnLink also placed into full service the Greater Chickadee crude oil gathering system during 2017.  Volumes on the system increased steadily throughout 2017, and EnLink expects to achieve continued growth on the system throughout 2018.
• Delaware Basin:
• EnLink's Delaware Basin Joint Venture (JV) achieved significant volume growth during 2017, with full-year 2017 average gas gathering and processing volumes increasing by approximately 300 percent as compared to the full-year 2016 average. EnLink expects to achieve continued volume growth throughout 2018, with average volumes expected to increase by approximately 150 percent for full-year 2018 as compared to the full-year 2017 average.
• To support continued volume growth across the Delaware Basin footprint, the Delaware Basin JV expanded its Lobo II facility by 60 MMcf/d during 2017, and plans to further expand the facility by 15 MMcf/d in 2018. Additionally, EnLink previously announced the construction of Lobo III, a new 200 MMcf/d expansion expected to be fully operational around year-end 2018. Today, EnLink's Delaware Basin JV operates a total of 155 MMcf/d of processing capacity, with 370 MMcf/d of processing capacity expected to be operational around the end of 2018.
• Louisiana:
• NGL fractionation volumes experienced 10 percent growth on average for the full-year 2017 as compared to full-year 2016.  EnLink expects throughput on its Cajun-Sibon pipeline to reach full capacity during 2018, largely driven by the completion of the Chisholm II and III expansions during 2017.  NGLs produced from EnLink's Chisholm complex are preferentially shipped to EnLink's Gulf Coast operations for further transportation, fractionation and downstream value creation.
• Record gas gathering and transmission volumes of over 2 Bcf/d were achieved on EnLink's Louisiana gas system during the second half of 2017, as demand across the footprint remained robust and EnLink continued to enhance operational capacity and capture new business. 
• Barnett Shale:
• Producer customers have become increasingly active in the Barnett Shale, with one to two rigs expected to be operating on EnLink's dedicated acreage throughout 2018.  Redevelopment activity, new well drilling, and pressure optimization initiatives are projected to reduce annual volume decline for 2018, as compared to 2017.
• EnLink's key producer customer in the Barnett Shale, Devon recently announced results related to its 6-well drilling pilot that leveraged an improved completion design.  Initial 30-day production rates from this 6-well pilot program attained per-well rates as high as 6.5 million cubic feet equivalent per day, with capital costs of approximately $3 million per well.  Devon also announced its 2018 capital outlook, and plans to allocate $50 million to Barnett operations during 2018.
• Additionally, Devon provided an update regarding its intent to divest select portions of its Barnett Shale position, with a focus on Johnson County and surrounding areas. EnLink holds acreage dedication rights related to Devon's East Johnson County operations, with current midstream services provided in this area representing approximately seven percent of EnLink's total North Texas gross operating margin for both 2017 and 2018.  Devon announced that it is currently in advanced negotiations with a preferred buyer, and a sale announcement is expected by March 31, 2018.

Fourth Quarter and Full-Year 2017 Results Call Details

The General Partner and the Partnership will hold a conference call to discuss fourth quarter and full-year 2017 financial results on Wednesday, February 21, 2018, at 9 a.m. Central Time (10 a.m. Eastern Time).  The dial-in number for the call is 1-855-656-0924. Callers outside the United States should dial 1-412-542-4172. Participants can also preregister for the conference call by navigating to http://dpregister.com/10115154 where they will receive dial-in information upon completion of preregistration. Interested parties can access an archived replay of the call on the Investors' page of EnLink's website at www.EnLink.com.

About the EnLink Midstream Companies

EnLink provides integrated midstream services across natural gas, crude oil, condensate, and NGL commodities.  EnLink operates in several top U.S. basins and is strategically focused on the core growth areas of the Permian's Midland and Delaware basins, Oklahoma's Midcontinent, and Louisiana's Gulf Coast. Headquartered in Dallas, EnLink is publicly traded through EnLink Midstream, LLC (NYSE: ENLC), the General Partner, and EnLink Midstream Partners, LP (NYSE: ENLK), the Master Limited Partnership. Visitwww.EnLink.com for more information on how EnLink connects energy to life.

Non-GAAP Financial Information
This press release contains non-generally accepted accounting principles ("GAAP") financial measures that we refer to as adjusted EBITDA, distributable cash flow available to common unitholders ("distributable cash flow"), gross operating margin, and the General Partner's cash available for distribution.

We define adjusted EBITDA as net income (loss) plus interest expense, provision (benefit) for income taxes, depreciation and amortization expense, impairments, unit-based compensation, (gain) loss on non-cash derivatives, (gain) loss on disposition of assets, (gain) loss on extinguishment of debt, successful acquisition transaction costs, accretion expense associated with asset retirement obligations, reimbursed employee costs, non-cash rent and distributions from unconsolidated affiliate investments, less payments under onerous performance obligations, non-controlling interest and (income) loss from unconsolidated affiliate investments.

We define distributable cash flow as adjusted EBITDA (as defined above), net to the Partnership, less interest expense (excluding amortization of the EnLink Oklahoma Gas Processing LP (together with its subsidiaries, "EnLink Oklahoma T.O.") acquisition installment payable discount), litigation settlement adjustment, adjustments for the redeemable non-controlling interest, interest rate swaps, current income taxes and other non-distributable cash flows, accrued cash distributions on Series B Cumulative Convertible Preferred Units (the "Series B Preferred Units") and Series C Fixed-to-Floating Rate Cumulative Redeemable Perpetual Preferred Units (the "Series C Preferred Units") paid or expected to be paid, and maintenance capital expenditures, excluding maintenance capital expenditures that were contributed by other entities and relate to the non-controlling interest share of our consolidated entities.

We define gross operating margin as revenues less cost of sales.

The General Partner's cash available for distribution is defined as net income (loss) of the General Partner less the net income (loss) attributable to the Partnership, which is consolidated into the General Partner's net income (loss), plus the General Partner's (i) share of distributions from the Partnership, (ii) share of EnLink Oklahoma T.O. non-cash expenses, (iii) deferred income tax (benefit) expense, (iv) corporate goodwill impairment, (v) acquisition transaction costs attributable to its share of the EnLink Oklahoma T.O. acquisition, less the General Partner's interest in maintenance capital expenditures of EnLink Oklahoma T.O. and less third-party non-controlling interest share of net income (loss) from consolidated affiliates.

The Partnership's distribution coverage is calculated by dividing distributable cash flow by distributions declared to the General Partner and the common unitholders. The General Partner's distribution coverage is calculated by dividing cash available for distribution by distributions declared by the General Partner.

Growth capital expenditures generally include capital expenditures made for acquisitions or capital improvements that we expect will increase our asset base, operating income or operating capacity over the long-term.

Maintenance capital expenditures generally include capital expenditures made to replace partially or fully depreciated assets in order to maintain the existing operating capacity of the assets and to extend their useful lives.

Segment profit (loss) is defined as operating income (loss) plus general and administrative expenses, depreciation and amortization, (gain) loss on disposition of assets, impairments and (gain) loss on litigation settlement. Segment profit (loss) includes non-cash compensation expenses reflected in operating expenses. See "Item 1. Financial Statements- Note 14 Segment Information" in ENLK's Quarterly Report on Form 10-Q for the quarter ended September 30, 2017 and, when available, "Item 1. Financial Statements- Note 15 Segment Information" in ENLK's Annual Report on Form 10-K for the year ended December 31, 2017, for further information about segment profit (loss).

The Partnership and General Partner believe these measures are useful to investors because they may provide users of this financial information with meaningful comparisons between current results and previously reported results and a meaningful measure of the Partnership's and the General Partner's cash flow after satisfaction of the capital and related requirements of their respective operations.  In addition, adjusted EBITDA achievement is a primary metric used in the Partnership's credit facility and short-term incentive program for compensating its employees.

Gross operating margin, adjusted EBITDA, distributable cash flow and cash available for distribution, as defined above, are not measures of financial performance or liquidity under GAAP. They should not be considered in isolation or as an indicator of the Partnership's and the General Partner's performance. Furthermore, they should not be seen as a substitute for metrics prepared in accordance with GAAP. Reconciliations of these measures to their most directly comparable GAAP measures for the periods that are presented in this press release are included in the following tables.  See ENLK's and ENLC's filings with the Securities and Exchange Commission for more information.

Forward-Looking Statements
This press release contains forward-looking statements within the meaning of the federal securities laws. Although these statements reflect the current views, assumptions and expectations of our management, the matters addressed herein involve certain assumptions, risks and uncertainties that could cause actual activities, performance, outcomes and results to differ materially from those indicated. 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, operational results of our customers, results in certain basins, future rig count information, objectives, project timing, expectations and intentions and other statements that are not historical facts. Factors that could result in such differences or otherwise materially affect our financial condition, results of operations and cash flows include, without limitation,(a) the dependence on Devon for a substantial portion of the natural gas that we gather, process and transport, (b) developments that materially and adversely affect Devon or our other customers, (c) adverse developments in the midstream business may reduce our ability to make distributions, (d) our vulnerability to having a significant portion of our operations concentrated in the Barnett Shale, (e) the amount of hydrocarbons transported in our gathering and transmission lines and the level of our processing and fractionation operations, (f) impairments to goodwill, long-lived assets and equity method investments, (g) our ability to balance our purchases and sales, (h) fluctuations in oil, natural gas and NGL prices, (i) construction risks in our major development projects, (j) conducting certain of our operations through joint ventures, (k) reductions in our credit ratings, (l) our debt levels and restrictions contained in our debt documents, (m) our ability to consummate future acquisitions, successfully integrate any acquired businesses, realize any cost savings and other synergies from any acquisition, (n) changes in the availability and cost of capital, (o) competitive conditions in our industry and their impact on our ability to connect hydrocarbon supplies to our assets, (p) operating hazards, natural disasters, weather-related delays, casualty losses and other matters beyond our control, (q) a failure in our computing systems or a cyber-attack on our systems, and (r) the effects of existing and future laws and governmental regulations, including environmental and climate change requirements and other uncertainties. These and other applicable uncertainties, factors and risks are described more fully in EnLink Midstream Partners, LP's and EnLink Midstream, LLC's filings with the Securities and Exchange Commission, including EnLink Midstream Partners, LP's and EnLink Midstream, LLC's Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K. Neither EnLink Midstream Partners, LP nor EnLink Midstream, LLC assumes any obligation to update any forward-looking statements.

The assumptions and estimates underlying the forecasted financial information included in the guidance information in this press release are inherently uncertain and, though considered reasonable by the EnLink Midstream management team as of the date of its preparation, are subject to a wide variety of significant business, economic, and competitive risks and uncertainties that could cause actual results to differ materially from those contained in the forecasted financial information. Accordingly, there can be no assurance that the forecasted results are indicative of EnLink Midstream's future performance or that actual results will not differ materially from those presented in the forecasted financial information. Inclusion of the forecasted financial information in this press release should not be regarded as a representation by any person that the results contained in the forecasted financial information will be achieved.

 

 

 

 

 

 

 

 

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

 

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