Document

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 June 30, 2019

☐ 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: 001-36336

ENLINK MIDSTREAM, LLC

(Exact name of registrant as specified in its charter)



Delaware		46-4108528
(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	Name of Exchange on which Registered	Symbol
Common Units Representing Limited	The New York Stock Exchange	ENLC
Liability Company Interests

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 ☒ 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 ☒ 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 August 1, 2019, the Registrant had 487,245,808 common units outstanding.

The following terms as defined are used in this document:



Defined Term		Definition
/d		Per day.
2014 Plan		EnLink Midstream, LLC’s 2014 Long-Term Incentive Plan.
AMZ		Alerian MLP Index for Master Limited Partnerships.
ASC		The FASB Accounting Standards Codification.
ASC 842		ASC 842, Leases, a new accounting standard effective January 1, 2019 related to the accounting for lease agreements.
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.
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. The Consolidated Credit Facility was available upon closing of the Merger and is guaranteed by ENLK.
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 located in the Delaware Basin in Texas.
Devon		Devon Energy Corporation.
Enfield		Enfield Holdings, L.P.
ENLC		EnLink Midstream, LLC.
ENLC Class C common Units		A class of non-economic ENLC common units issued to Enfield immediately prior to the Merger equal to the number of Series B Preferred Units of ENLK held by Enfield immediately prior to the effective time of the Merger, in order to provide Enfield with certain voting rights with respect to ENLC.
ENLC Credit Facility		A $250.0 million secured revolving credit facility entered into by ENLC that would have matured on March 7, 2019, which included a $125.0 million letter of credit subfacility. The ENLC Credit Facility was terminated on January 25, 2019 in connection with the consummation of the Merger.
ENLC EDA		Equity Distribution Agreement entered into by ENLC in February 2019 with RBC Capital Markets, LLC, Merrill Lynch, Pierce, Fenner & Smith Incorporated, Barclays Capital Inc., BMO Capital Markets Corp., Citigroup Global Markets Inc., Credit Suisse Securities (USA) LLC, J.P. Morgan Securities LLC, Jefferies LLC, Mizuho Securities USA LLC, MUFG Securities Americas Inc., SunTrust Robinson Humphrey, Inc., and Wells Fargo Securities, LLC (collectively, the “Sales Agents”) to sell up to $400.0 million in aggregate gross sales of ENLC common units from time to time through an “at the market” equity offering program.
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 is wholly-owned by 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.



General Partner		EnLink Midstream GP, LLC, the general partner of ENLK, which owns a 0.4% general partner interest in ENLK. Prior to the effective time of the Merger, the General Partner also owned all of the incentive distribution rights in ENLK.
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.
GIP Transaction		On July 18, 2018, subsidiaries of Devon closed a transaction to sell all of their equity interests in ENLK, ENLC, and the managing member of ENLC to GIP.
GP Plan		EnLink Midstream GP, LLC’s Long-Term Incentive Plan.
Gross Operating Margin		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 the definition and other information.
ISDAs		International Swaps and Derivatives Association Agreements.
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, the General Partner, ENLC, the managing member of ENLC, and NOLA Merger Sub related to the Merger.
MMbbls		One 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.
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.
Permian Basin		A large sedimentary basin that includes the Midland and Delaware Basins in west Texas and New Mexico.
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.
White Star		White Star Petroleum Holdings, LLC.

PART I—FINANCIAL INFORMATION

Item 1. Financial Statements

ENLINK MIDSTREAM, LLC AND SUBSIDIARIES

Consolidated Balance Sheets

(In millions, except unit data)



	June 30, 2019			December 31, 2018
	(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents	$	59.0		$	100.4
Accounts receivable:
Trade, net of allowance for bad debt of $0.5 and $0.3, respectively	78.4			126.3
Accrued revenue and other	483.9			705.9
Related party	—			0.7
Fair value of derivative assets	9.5			28.6
Natural gas and NGLs inventory, prepaid expenses, and other	72.8			74.2
Total current assets	703.6			1,036.1
Property and equipment, net of accumulated depreciation of $3,198.1 and $2,967.4, respectively	7,023.5			6,846.7
Intangible assets, net of accumulated amortization of $484.1 and $422.2, respectively	1,311.7			1,373.6
Goodwill	1,123.7			1,310.2
Investment in unconsolidated affiliates	80.0			80.1
Fair value of derivative assets	7.1			4.1
Other assets, net	143.4			43.3
Total assets	$	10,393.0		$	10,694.1
LIABILITIES AND MEMBERS’ EQUITY
Current liabilities:
Accounts payable and drafts payable	$	80.8		$	105.5
Accounts payable to related party	2.0			4.3
Accrued gas, NGLs, condensate, and crude oil purchases	377.1			500.4
Fair value of derivative liabilities	5.8			21.8
Current maturities of long-term debt	—			399.8
Other current liabilities	243.5			248.2
Total current liabilities	709.2			1,280.0
Long-term debt	4,612.5			4,031.0
Asset retirement obligations	15.2			14.8
Other long-term liabilities	93.0			20.0
Deferred tax liability, net	—			362.4
Fair value of derivative liabilities	10.6			2.4

Redeemable non-controlling interest	5.8			9.3

Members’ equity:
Members’ equity (487,227,012 and 181,309,981 units issued and outstanding, respectively)	3,324.6			1,730.9
Accumulated other comprehensive loss	(11.9		)	(2.0		)
Non-controlling interest	1,634.0			3,245.3
Total members’ equity	4,946.7			4,974.2
Total liabilities and members’ equity	$	10,393.0		$	10,694.1

See accompanying notes to consolidated financial statements.

ENLINK MIDSTREAM, LLC AND SUBSIDIARIES

Consolidated Statements of Operations

(In millions, except per unit data)



	Three Months Ended June 30,						Six Months Ended June 30,
	2019			2018			2019			2018
	(Unaudited)
Revenues:
Product sales	$	1,450.4		$	1,435.1		$	2,981.3		$	2,934.3
Product sales—related parties	—			27.2			—			30.8
Midstream services	252.7			142.4			499.2			234.6
Midstream services—related parties	—			175.2			—			341.4
Gain (loss) on derivative activity	6.9			(15.2		)	8.7			(14.7		)
Total revenues	1,710.0			1,764.7			3,489.2			3,526.4
Operating costs and expenses:
Cost of sales (1)	1,300.1			1,325.6			2,663.5			2,707.1
Operating expenses	117.9			113.4			232.4			222.6
General and administrative	32.2			30.4			83.6			57.9
Loss on disposition of assets	0.1			1.2			0.1			1.3
Depreciation and amortization	153.7			145.3			305.8			283.4
Impairments	—			—			186.5			—
Loss on secured term loan receivable	52.9			—			52.9			—
Total operating costs and expenses	1,656.9			1,615.9			3,524.8			3,272.3
Operating income (loss)	53.1			148.8			(35.6		)	254.1
Other income (expense):
Interest expense, net of interest income	(54.3		)	(44.6		)	(103.9		)	(89.1		)
Income from unconsolidated affiliates	4.7			4.4			10.0			7.4
Other income (expense)	0.2			(0.1		)	0.2			0.2
Total other expense	(49.4		)	(40.3		)	(93.7		)	(81.5		)
Income (loss) before non-controlling interest and income taxes	3.7			108.5			(129.3		)	172.6
Income tax benefit (provision)	5.4			(6.3		)	3.6			(13.3		)
Net income (loss)	9.1			102.2			(125.7		)	159.3
Net income attributable to non-controlling interest	25.2			74.2			66.7			118.9
Net income (loss) attributable to ENLC	$	(16.1	)	$	28.0		$	(192.4	)	$	40.4
Net income (loss) attributable to ENLC per unit:
Basic common unit	$	(0.03	)	$	0.15		$	(0.44	)	$	0.22
Diluted common unit	$	(0.03	)	$	0.15		$	(0.44	)	$	0.22

____________________________

Includes related party cost of sales of $5.8 million and $46.7 million for the three months ended June 30, 2019 and 2018, respectively, and $13.9 million and $80.8 million for the six months ended June 30, 2019 and 2018, respectively.

See accompanying notes to consolidated financial statements.

ENLINK MIDSTREAM, LLC AND SUBSIDIARIES

Consolidated Statements of Comprehensive Income (Loss)



	Three Months Ended June 30,					Six Months Ended June 30,
	2019			2018		2019			2018
	(Unaudited)
Net income (loss)	$	9.1		$	102.2	$	(125.7	)	$	159.3
Loss on designated cash flow hedge (1)	(9.9		)	—		(9.9		)	—
Comprehensive income (loss)	(0.8		)	102.2		(135.6		)	159.3
Comprehensive income attributable to non-controlling interest	25.2			74.2		66.7			118.9
Comprehensive income (loss) attributable to ENLC	$	(26.0	)	$	28.0	$	(202.3	)	$	40.4

____________________________

Includes a tax benefit of $3.6 million and an immaterial amount of amortization to interest expense for the three and six months ended June 30, 2019, respectively, and an immaterial amount of amortization to interest expense for the three and six months ended June 30, 2018, respectively.

See accompanying notes to consolidated financial statements.

ENLINK MIDSTREAM, LLC AND SUBSIDIARIES

Consolidated Statements of Changes in Members’ Equity



	Common Units				Accumulated Other Comprehensive Loss			Non-Controlling Interest			Total			Redeemable Non-controlling interest (Temporary Equity)
	$			Units	$			$			$			$
	(Unaudited)
Balance, December 31, 2018	$	1,730.9		181.3	$	(2.0	)	$	3,245.3		$	4,974.2		$	9.3
Adoption of ASC 842	0.3			—	—			—			0.3			—
Balance, January 1, 2019	1,731.2			181.3	(2.0		)	3,245.3			4,974.5			9.3
Conversion of restricted units for common units, net of units withheld for taxes	(5.6		)	1.0	—			(2.8		)	(8.4		)	—
Unit-based compensation	12.2			—	—			1.4			13.6			—
Contributions from non-controlling interests	—			—	—			15.7			15.7			—
Distributions	(51.0		)	—	—			(127.6		)	(178.6		)	—
Fair value adjustment related to redeemable non-controlling interest	2.5			—	—			—			2.5			(2.1		)
Net income (loss)	(176.3		)	—	—			41.5			(134.8		)	—
Issuance of common units for ENLK public common units related to the Merger	1,958.1			304.9	—			(1,559.1		)	399.0			—
Balance, March 31, 2019	3,471.1			487.2	(2.0		)	1,614.4			5,083.5			7.2
Unit-based compensation	6.6			—	—			—			6.6			—
Contributions from non-controlling interests	—			—	—			29.5			29.5			—
Distributions	(137.2		)	—	—			(35.1		)	(172.3		)	—
Loss on designated cash flow hedge (1)	—			—	(9.9		)	—			(9.9		)	—
Fair value adjustment related to redeemable non-controlling interest	0.2			—	—			—			0.2			(1.4		)
Net income (loss)	(16.1		)	—	—			25.2			9.1			—
Balance, June 30, 2019	$	3,324.6		487.2	$	(11.9	)	$	1,634.0		$	4,946.7		$	5.8

____________________________

Includes a tax benefit of $3.6 million and an immaterial amount of amortization to interest expense.

See accompanying notes to consolidated financial statements.

ENLINK MIDSTREAM, LLC AND SUBSIDIARIES

Consolidated Statements of Changes in Members’ Equity (Continued)



	Common Units			Accumulated Other Comprehensive Loss			Non-Controlling Interest		Total		Redeemable Non-controlling interest (Temporary Equity)
	$		Units	$			$		$		$
	(Unaudited)
Balance, December 31, 2017	$	1,924.2	180.6	$	(2.0	)	$	3,634.5	$	5,556.7	$	4.6
Issuance of common units by ENLK	—		—	—			0.9		0.9		—



Item	Description	Page

	PART I—FINANCIAL INFORMATION

1.	Financial Statements	5

2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	41

3.	Quantitative and Qualitative Disclosures About Market Risk	58

4.	Controls and Procedures	61

	PART II—OTHER INFORMATION

1.	Legal Proceedings	62

1A.	Risk Factors	62

2.	Unregistered Sales of Equity Securities and Use of Proceeds	62

6.	Exhibits	63