enlc-20200331

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

☒ Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the quarterly period ended March 31, 2020

☐ Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the transition period from to

Commission file number: 001-36340

ENLINK MIDSTREAM PARTNERS, LP

(Exact name of registrant as specified in its charter)


Delaware			16-1616605
(State of organization)			(I.R.S. Employer Identification No.)

1722 Routh St., Suite 1300
Dallas,	Texas	75201
(Address of principal executive offices)			(Zip Code)

(Registrant’s telephone number, including area code)

SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE SECURITIES EXCHANGE ACT OF 1934:

Title of Each Class

Trading Symbol

Name of Exchange on which Registered

None.

Indicate by check mark whether registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ý No ¨

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ý No ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Securities Exchange Act. (Check one):

Large accelerated filer

☐

Accelerated filer

☐

Non-accelerated filer

☒

Smaller reporting company

☐

Emerging growth company

☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ☐ No ☒

As of April 30, 2020, the Registrant had 144,358,720 common units outstanding, all of which were held by our affiliate, EnLink Midstream, LLC.

The following terms as defined are used in this document:


Defined Term						Definition
/d						Per day.
2014 Plan						ENLC’s 2014 Long-Term Incentive Plan.

ASC						The FASB Accounting Standards Codification.
ASC 350						ASC 350, Intangibles—Goodwill and Other.
ASC 842						ASC 842, Leases.
Ascension JV						Ascension Pipeline Company, LLC, a joint venture between a subsidiary of ENLK and a subsidiary of Marathon Petroleum Corporation in which ENLK owns a 50% interest and Marathon Petroleum Corporation owns a 50% interest. The Ascension JV, which began operations in April 2017, owns an NGL pipeline that connects ENLK’s Riverside fractionator to Marathon Petroleum Corporation’s Garyville refinery.
ASU						The FASB Accounting Standards Update.
Avenger						Avenger crude oil gathering system, a crude oil gathering system in the northern Delaware Basin.
Bbls						Barrels.
Bcf						Billion cubic feet.
Cedar Cove JV						Cedar Cove Midstream LLC, a joint venture between a subsidiary of ENLK and a subsidiary of Kinder Morgan, Inc. in which ENLK owns a 30% interest and Kinder Morgan, Inc. owns a 70% interest. The Cedar Cove JV, which was formed in November 2016, owns gathering and compression assets in Blaine County, Oklahoma, located in the STACK play.
CFTC						U.S. Commodity Futures Trading Commission.
CNOW						Central Northern Oklahoma Woodford Shale.
Commission						U.S. Securities and Exchange Commission.
Consolidated Credit Facility						A $1.75 billion unsecured revolving credit facility entered into by ENLC that matures on January 25, 2024, which includes a $500.0 million letter of credit subfacility.
Delaware Basin						A large sedimentary basin in West Texas and New Mexico.
Delaware Basin JV						Delaware G&P LLC, a joint venture between a subsidiary of ENLK and an affiliate of NGP in which ENLK owns a 50.1% interest and NGP owns a 49.9% interest. The Delaware Basin JV, which was formed in August 2016, owns the Lobo processing facilities and the Tiger Plant located in the Delaware Basin in Texas.
Devon						Devon Energy Corporation.


ENLC						EnLink Midstream, LLC.

ENLK						EnLink Midstream Partners, LP or, when applicable, EnLink Midstream Partners, LP together with its consolidated subsidiaries. Also referred to as the “Partnership.”
ENLK Credit Facility						A $1.5 billion unsecured revolving credit facility entered into by ENLK that would have matured on March 6, 2020, which included a $500.0 million letter of credit subfacility. The ENLK Credit Facility was terminated on January 25, 2019 in connection with the consummation of the Merger.
EOGP						EnLink Oklahoma Gas Processing, LP or EnLink Oklahoma Gas Processing, LP together with, when applicable, its consolidated subsidiaries. As of January 31, 2019, EOGP became a wholly-owned subsidiary of the Operating Partnership.
FASB						Financial Accounting Standards Board.
GAAP						Generally accepted accounting principles in the United States of America.
Gal						Gallons.
GCF						Gulf Coast Fractionators, which owns an NGL fractionator in Mont Belvieu, Texas. ENLK owns 38.75% of GCF.
GIP						Global Infrastructure Management, LLC, an independent infrastructure fund manager, itself, its affiliates, or managed fund vehicles, including GIP III Stetson I, L.P., GIP III Stetson II, L.P., and their affiliates.

GP Plan						Our general partner’s Long-Term Incentive Plan.

Gross Operating Margin						Revenue less cost of sales. Gross Operating Margin is a non-GAAP financial measure. See “Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations—Non-GAAP Financial Measures” for additional information.
ISDAs						International Swaps and Derivatives Association Agreements.
Legacy ENLK Awards						Unit-based awards granted under the GP Plan prior to the Merger. As of the closing of the Merger, Legacy ENLK Awards converted into ENLC unit-based awards using the 1.15 exchange ratio from the Merger Agreement as the conversion rate. No additional awards will be granted under the GP Plan.

Merger						On January 25, 2019, NOLA Merger Sub merged with and into ENLK with ENLK continuing as the surviving entity and a subsidiary of ENLC.


Merger Agreement						The Agreement and Plan of Merger, dated as of October 21, 2018, by and among ENLK, our general partner, ENLC, the managing member of ENLC, and NOLA Merger Sub related to the Merger.
MMbbls						Million barrels.
MMbtu						Million British thermal units.
MMcf						Million cubic feet.
MVC						Minimum volume commitment.
NGL						Natural gas liquid.
NGP						NGP Natural Resources XI, LP.
NOLA Merger Sub						NOLA Merger Sub, LLC, previously a wholly-owned subsidiary of ENLC prior to the Merger.
OPEC+						Organization of the Petroleum Exporting Countries and its broader partners.
Operating Partnership						EnLink Midstream Operating, LP, a Delaware limited partnership and wholly owned subsidiary of ENLK.
ORV						ENLK’s Ohio River Valley crude oil, condensate stabilization, natural gas compression, and brine disposal assets in the Utica and Marcellus shales.
OTC						Over-the-counter.

POL contracts						Percentage-of-liquids contracts.
POP contracts						Percentage-of-proceeds contracts.
Series B Preferred Units						ENLK’s Series B Cumulative Convertible Preferred Units.
Series C Preferred Units						ENLK’s Series C Fixed-to-Floating Rate Cumulative Redeemable Perpetual Preferred Units.
STACK						Sooner Trend Anadarko Basin Canadian and Kingfisher Counties in Oklahoma.
Term Loan						An $850.0 million term loan entered into by ENLK on December 11, 2018 with Bank of America, N.A., as Administrative Agent, Bank of Montreal and Royal Bank of Canada, as Co-Syndication Agents, Citibank, N.A. and Wells Fargo Bank, National Association, as Co-Documentation Agents, and the lenders party thereto, which ENLC assumed in connection with the Merger and the obligations of which ENLK guarantees.
Thunderbird Plant						A gas processing plant in Central Oklahoma.
Tiger Plant						A gas processing plant that is under construction in the Delaware Basin and is owned by the Delaware Basin JV.

PART I—FINANCIAL INFORMATION

Item 1. Financial Statements

ENLINK MIDSTREAM PARTNERS, LP AND SUBSIDIARIES

Consolidated Balance Sheets

(In millions, except unit data)


	March 31, 2020		December 31, 2019
	(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents	$	258.1	$	77.4
Accounts receivable:
Trade, net of allowance for bad debt of $0.6 and $0.5, respectively	34.2		36.2
Accrued revenue and other	337.4		460.1
Related party	14.8		18.1
Fair value of derivative assets	75.0		12.9
Other current assets	17.8		56.9
Total current assets	737.3		661.6
Property and equipment, net of accumulated depreciation of $3,545.2 and $3,418.6, respectively	6,896.3		7,081.3
Intangible assets, net of accumulated amortization of $576.8 and $545.9, respectively	1,219.0		1,249.9
Investment in unconsolidated affiliates	43.0		43.1
Fair value of derivative assets	8.2		4.3
Other assets, net	93.3		94.4
Total assets	$	8,997.1	$	9,134.6
LIABILITIES AND PARTNERS’ EQUITY
Current liabilities:
Accounts payable and drafts payable	$	51.2	$	70.6
Accounts payable to related party	0.5		1.1
Accrued gas, NGLs, condensate, and crude oil purchases	176.1		354.8
Fair value of derivative liabilities	77.9		14.4

Other current liabilities	205.2		201.7
Total current liabilities	510.9		642.6
Long-term debt, including $1,900.0 and $1,700.0 from related parties, respectively	4,954.8		4,764.3
Asset retirement obligations	15.7		15.5
Other long-term liabilities	87.7		90.8
Deferred tax liability	44.7		44.5
Fair value of derivative liabilities	13.4		6.8

Redeemable non-controlling interest	—		5.2

Partners’ equity:
Common unitholders (144,358,720 units issued and outstanding)	1,465.6		1,681.2
Series B preferred unitholders (59,748,549 and 59,599,550 units issued and outstanding, respectively)	895.3		895.1
Series C preferred unitholders (400,000 units outstanding)	401.1		395.1
General partner interest (1,594,974 equivalent units outstanding)	215.2		216.6
Accumulated other comprehensive loss	(31.6)		(14.5)
Non-controlling interest	424.3		391.4
Total partners’ equity	3,369.9		3,564.9
Total liabilities and partners’ equity	$	8,997.1	$	9,134.6

See accompanying notes to consolidated financial statements.

ENLINK MIDSTREAM PARTNERS, LP AND SUBSIDIARIES

Consolidated Statements of Operations

(In millions, except per unit data)


	Three Months Ended March 31,
	2020		2019
	(Unaudited)
Revenues:
Product sales	$	892.9	$	1,530.9

Midstream services	244.0		246.5

Gain on derivative activity	19.2		1.8
Total revenues	1,156.1		1,779.2
Operating costs and expenses:
Cost of sales	755.3		1,363.4
Operating expenses	100.7		114.5
General and administrative	30.9		38.6
Gain on disposition of assets	(0.6)		—
Depreciation and amortization	162.8		152.1
Impairments	168.4		—


Total operating costs and expenses	1,217.5		1,668.6
Operating income (loss)	(61.4)		110.6
Other income (expense):
Interest expense, net of interest income	(55.6)		(49.3)
Gain on extinguishment of debt	5.3		—
Income from unconsolidated affiliates	1.7		5.3

Total other expense	(48.6)		(44.0)
Income (loss) before non-controlling interest and income taxes	(110.0)		66.6
Income tax expense	(0.5)		(0.9)
Net income (loss)	(110.5)		65.7
Net income attributable to non-controlling interest	3.4		2.9
Net income (loss) attributable to ENLK	$	(113.9)	$	62.8

See accompanying notes to consolidated financial statements.

ENLINK MIDSTREAM PARTNERS, LP AND SUBSIDIARIES

Consolidated Statements of Comprehensive Income (Loss)


	Three Months Ended March 31,
	2020		2019
	(Unaudited)
Net income (loss)	$	(110.5)	$	65.7
Loss on designated cash flow hedge	(17.1)		—
Comprehensive income (loss)	(127.6)		65.7
Comprehensive income attributable to non-controlling interest	3.4		2.9
Comprehensive income (loss) attributable to ENLK	$	(131.0)	$	62.8

See accompanying notes to consolidated financial statements.

ENLINK MIDSTREAM PARTNERS, LP AND SUBSIDIARIES

Consolidated Statements of Changes in Partners’ Equity


	Common Units					Series B Preferred Units				Series C Preferred Units					General Partner Interest						Accumulated Other Comprehensive Loss	Non-Controlling Interest	Total	Redeemable Non-Controlling Interest (Temporary Equity)
	$		Units	$		Units	$		Units	$		Units	$		$		$		$
	(Unaudited)
Balance, December 31, 2019	$	1,681.2	144.4	$	895.1	59.6	$	395.1	0.4	$	216.6	1.6	$	(14.5)	$	391.4	$	3,564.9	$	5.2
Unit-based compensation	—		—	—		—	—		—	12.3		—	—		—		12.3		—
Distributions	(93.3)		—	(16.8)		0.1	—		—	—		—	—		(7.6)		(117.7)		(0.3)
Contributions from non-controlling interests	—		—	—		—	—		—	—		—	—		37.1		37.1		—
Loss on designated cash flow hedge	—		—	—		—	—		—	—		—	(17.1)		—		(17.1)		—
Redemption of non-controlling interest	—		—	—		—	—		—	—		—	—		—		—		(4.0)
Fair value adjustment related to redeemable non-controlling interest	0.9		—	—		—	—		—	—		—	—		—		0.9		(0.9)
Net income (loss)	(123.2)		—	17.0		—	6.0		—	(13.7)		—	—		3.4		(110.5)		—
Balance, March 31, 2020	$	1,465.6	144.4	$	895.3	59.7	$	401.1	0.4	$	215.2	1.6	$	(31.6)	$	424.3	$	3,369.9	$	—

See accompanying notes to consolidated financial statements.

ENLINK MIDSTREAM PARTNERS, LP AND SUBSIDIARIES

Consolidated Statements of Changes in Partners’ Equity (Continued)


	Common Units					Series B Preferred Units				Series C Preferred Units					General Partner Interest						Accumulated Other Comprehensive Loss	Non-Controlling Interest	Total	Redeemable Non-Controlling Interest (Temporary Equity)
	$		Units	$		Units	$		Units	$		Units	$		$		$		$
	(Unaudited)
Balance, December 31, 2018	$	2,460.8	353.1	$	889.3	58.7	$	395.1	0.4	$	231.2	1.6	$	(2.1)	$	309.8	$	4,284.1	$	9.3
Adoption of ASC 842	0.3		—	—		—	—		—	—		—	—		—		0.3		—
Balance, January 1, 2019	2,461.1		353.1	889.3		58.7	395.1		0.4	231.2		1.6	(2.1)		309.8		4,284.4		9.3
Conversion of restricted units for common units, net of units withheld for taxes	(2.8)		0.5	—		—	—		—	—		—	—		—		(2.8)		—
Unit-based compensation	1.4		—	—		—	—		—	12.1		—	—		—		13.5		—
Distributions	(139.4)		—	(16.5)		0.5	—		—	(15.6)		—	—		(6.3)		(177.8)		—
Contributions from non-controlling interests	—		—	—		—	—		—	—		—	—		15.7		15.7		—
Fair value adjustment related to redeemable non-controlling interest	2.1		—	—		—	—		—	—		—	—		—		2.1		(2.1)
Issuance of common units to ENLC for acquisition of EOGP	—		55.8	—		—	—		—	—		—	—		—		—		—
Conversion of ENLK common units into ENLC units	—		(265.0)	—		—	—		—	—		—	—		—		—		—
Net income (loss)	47.5		—	18.6		—	6.0		—	(9.3)		—	—		2.9		65.7		—
Balance, March 31, 2019	$	2,369.9	144.4	$	891.4	59.2	$	401.1	0.4	$	218.4	1.6	$	(2.1)	$	322.1	$	4,200.8	$	7.2

See accompanying notes to consolidated financial statements.

ENLINK MIDSTREAM PARTNERS, LP AND SUBSIDIARIES

Consolidated Statements of Cash Flows


	Three Months Ended March 31,
	2020		2019
	(Unaudited)
Cash flows from operating activities:
Net income (loss)	$	(110.5)	$	65.7
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Impairments	168.4		—
Depreciation and amortization	162.8		152.1


Non-cash unit-based compensation	8.8		10.9

Gain on derivatives recognized in net income (loss)	(19.2)		(1.8)
Cash settlements on derivatives	1.2		4.6
Gain on extinguishment of debt	(5.3)		—
Amortization of debt issue costs, net discount (premium) of notes	1.0		1.8

Distribution of earnings from unconsolidated affiliates	1.6		2.2
Income from unconsolidated affiliates	(1.7)		(5.3)

Other operating activities	(1.0)		(0.4)
Changes in assets and liabilities:
Accounts receivable, accrued revenue, and other	128.0		76.2
Natural gas and NGLs inventory, prepaid expenses, and other	44.8		3.6
Accounts payable, accrued product purchases, and other accrued liabilities	(200.9)		(51.5)
Net cash provided by operating activities	178.0		258.1
Cash flows from investing activities:
Additions to property and equipment	(112.0)		(241.5)



Other investing activities	(3.5)		0.5
Net cash used in investing activities	(115.5)		(241.0)
Cash flows from financing activities:
Proceeds from borrowings	440.0		1,368.4
Payments on borrowings	(241.0)		(1,320.0)

Debt financing costs	—		(5.6)


Distributions to non-controlling interests	(7.9)		(6.3)
Contributions by non-controlling interests	37.1		15.7
Distributions to Series B Preferred Units	(16.8)		(16.5)

Distributions to common unitholders and to general partner	(93.3)		(155.0)
Other financing activities	0.1		2.8
Net cash provided by (used in) financing activities	118.2		(116.5)
Net increase (decrease) in cash and cash equivalents	180.7		(99.4)
Cash and cash equivalents, beginning of period	77.4		99.5
Cash and cash equivalents, end of period	$	258.1	$	0.1

Supplemental disclosures of cash flow information:
Cash paid for interest	$	22.3	$	13.9
Cash paid for income taxes	$	0.2	$	—
Non-cash investing activities:
Non-cash accrual of property and equipment	$	2.8	$	9.5
Non-cash financing activities:
Redemption of non-controlling interest	$	(4.0)	$	—


Item	Description	Page

	PART I—FINANCIAL INFORMATION

1.	Financial Statements	5

2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	29

3.	Quantitative and Qualitative Disclosures About Market Risk	41

4.	Controls and Procedures	44

	PART II—OTHER INFORMATION

1.	Legal Proceedings	45

1A.	Risk Factors	45



6.	Exhibits	46