enlc-20220331

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

Form 10-Q

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

For the quarterly period ended March 31, 2022

☐ 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)

(214) 953-9500

(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

Common Units Representing Limited Liability Company Interests

ENLC

The New York Stock Exchange

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 April 28, 2022, the Registrant had 483,011,794 common units outstanding.

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TABLE OF CONTENTS


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	47

4.	Controls and Procedures	50

	PART II—OTHER INFORMATION

1.	Legal Proceedings	51

1A.	Risk Factors	51

2.	Unregistered Sales of Equity Securities and Use of Proceeds	51



6.	Exhibits	52

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DEFINITIONS

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.
Adjusted gross margin						Revenue less cost of sales, exclusive of operating expenses and depreciation and amortization. Adjusted gross 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.
AR Facility						An accounts receivable securitization facility of up to $350 million entered into by EnLink Midstream Funding, LLC, a bankruptcy-remote special purpose entity and our indirect subsidiary, with PNC Bank, National Association, as administrative agent and lender, and PNC Capital Markets, LLC, as structuring agent and sustainability agent. The AR Facility is scheduled to terminate on September 24, 2024, unless extended or earlier terminated in accordance with its terms.
ASC						The Financial Accounting Standards Board Accounting Standards Codification.
ASC 718						ASC 718, Compensation—Stock Compensation.
ASC 820						ASC 820, Fair Value Measurements.



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.
Bbl						Barrel.
Bcf						Billion cubic feet.
Beginning TSR Price						The beginning total shareholder return (“TSR”) price, which is the closing unit price of ENLC on the grant date of the performance award agreement or the previous trading day if the grant date was not a trading day, is one of the assumptions used to calculate the grant-date fair value of performance award agreements.
CCS						Carbon capture, transportation, and sequestration.
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.
CO2						Carbon dioxide.
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. The Consolidated Credit Facility was available upon closing of the Merger and is guaranteed by ENLK.
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 processing plant located in the Delaware Basin in Texas.
ENLC						EnLink Midstream, LLC.
ENLC Class C Common Units						A class of non-economic ENLC common units issued immediately prior to the Merger equal to the number of Series B Preferred Units held immediately prior to the effective time of the Merger, in order to provide certain voting rights to holders of the Series B Preferred Units with respect to ENLC.
ENLK						EnLink Midstream Partners, LP or, when applicable, EnLink Midstream Partners, LP together with its consolidated subsidiaries. Also referred to as the “Partnership.”
Exchange Act						The Securities Exchange Act of 1934, as amended.
GAAP						Generally accepted accounting principles in the United States of America.
Gal						Gallon.
GCF						Gulf Coast Fractionators, which owns an NGL fractionator in Mont Belvieu, Texas. ENLK owns 38.75% of GCF. The GCF assets have been temporarily idled to reduce operating expenses. We expect these assets to resume operations when there is a sustained need for additional fractionation capacity in Mont Belvieu.
General Partner						EnLink Midstream GP, LLC, the general partner of ENLK.

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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.
ISDAs						International Swaps and Derivatives Association Agreements.
LIBOR						U.S. Dollar London Interbank Offered Rate.
Managing Member						EnLink Midstream Manager, LLC, the managing member of ENLC.
Merger						On January 25, 2019, NOLA Merger Sub, LLC (previously a wholly-owned subsidiary of ENLC) merged with and into ENLK with ENLK continuing as the surviving entity and a subsidiary of ENLC.
Midland Basin						A large sedimentary basin in West Texas.
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.
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.
Permian Basin						A large sedimentary basin that includes the Midland and Delaware Basins primarily in West Texas and New Mexico.
POL contracts						Percentage-of-liquids contracts.
POP contracts						Percentage-of-proceeds contracts.
Series B Preferred Unit						ENLK’s Series B Cumulative Convertible Preferred Unit.
Series C Preferred Unit						ENLK’s Series C Fixed-to-Floating Rate Cumulative Redeemable Perpetual Preferred Unit.
STACK						Sooner Trend Anadarko Basin Canadian and Kingfisher Counties in Oklahoma.
Term Loan						A term loan originally in the amount of $850.0 million 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 guaranteed. The Term Loan was paid at maturity.

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PART I—FINANCIAL INFORMATION

Item 1. Financial Statements

ENLINK MIDSTREAM, LLC AND SUBSIDIARIES

Consolidated Balance Sheets

(In millions, except unit data)


	March 31, 2022		December 31, 2021
	(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents	$	68.7	$	26.2
Accounts receivable:
Trade, net of allowance for bad debt of $0.3 and $0.3, respectively	70.4		94.9
Accrued revenue and other	857.9		693.3

Fair value of derivative assets	68.1		22.4
Other current assets	112.7		83.6
Total current assets	1,177.8		920.4
Property and equipment, net of accumulated depreciation of $4,450.6 and $4,332.0, respectively	6,321.8		6,388.3
Intangible assets, net of accumulated amortization of $827.9 and $795.1, respectively	1,016.9		1,049.7

Investment in unconsolidated affiliates	27.3		28.0
Fair value of derivative assets	0.1		0.2
Other assets, net	96.3		96.6
Total assets	$	8,640.2	$	8,483.2
LIABILITIES AND MEMBERS’ EQUITY
Current liabilities:
Accounts payable and drafts payable	$	131.7	$	139.6

Accrued gas, NGLs, condensate, and crude oil purchases (1)	740.0		521.5
Fair value of derivative liabilities	97.2		34.9
Other current liabilities	215.4		202.9
Total current liabilities	1,184.3		898.9
Long-term debt, net of unamortized issuance cost	4,315.0		4,363.7

Other long-term liabilities	94.0		93.9
Deferred tax liability, net	140.5		137.5
Fair value of derivative liabilities	0.6		2.2

Members’ equity:
Members’ equity (483,364,767 and 484,277,258 units issued and outstanding, respectively)	1,291.5		1,325.8
Accumulated other comprehensive loss	(1.3)		(1.4)
Non-controlling interest	1,615.6		1,662.6
Total members’ equity	2,905.8		2,987.0
Commitments and contingencies (Note 14)
Total liabilities and members’ equity	$	8,640.2	$	8,483.2

____________________________

(1)Includes related party accounts payable balances of $5.8 million and $1.6 million at March 31, 2022 and December 31, 2021, respectively.

See accompanying notes to consolidated financial statements.

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ENLINK MIDSTREAM, LLC AND SUBSIDIARIES

Consolidated Statements of Operations

(In millions, except per unit data)


	Three Months Ended March 31,
	2022		2021
	(Unaudited)
Revenues:
Product sales	$	2,043.9	$	1,122.9

Midstream services	215.0		208.9

Loss on derivative activity	(31.2)		(83.4)
Total revenues	2,227.7		1,248.4
Operating costs and expenses:
Cost of sales, exclusive of operating expenses and depreciation and amortization (1)	1,794.5		934.7
Operating expenses	120.9		56.3
Depreciation and amortization	152.9		151.0

Loss on disposition of assets	5.1		—
General and administrative	29.0		26.0


Total operating costs and expenses	2,102.4		1,168.0
Operating income	125.3		80.4
Other income (expense):
Interest expense, net of interest income	(55.1)		(60.0)

Loss from unconsolidated affiliate investments	(1.1)		(6.3)
Other income (expense)	0.1		(0.1)
Total other expense	(56.1)		(66.4)
Income before non-controlling interest and income taxes	69.2		14.0
Income tax expense	(3.2)		(1.4)
Net income	66.0		12.6
Net income attributable to non-controlling interest	30.8		25.3
Net income (loss) attributable to ENLC	$	35.2	$	(12.7)
Net income (loss) attributable to ENLC per unit:
Basic common unit	$	0.07	$	(0.03)
Diluted common unit	$	0.07	$	(0.03)

____________________________

(1)Includes related party cost of sales of $10.6 million and $3.2 million for the three months ended March 31, 2022 and 2021, respectively.

See accompanying notes to consolidated financial statements.

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ENLINK MIDSTREAM, LLC AND SUBSIDIARIES

Consolidated Statements of Comprehensive Income

(In millions)


	Three Months Ended March 31,
	2022		2021
	(Unaudited)
Net income	$	66.0	$	12.6
Unrealized gain on designated cash flow hedge (1)	0.1		3.6
Comprehensive income	66.1		16.2
Comprehensive income attributable to non-controlling interest	30.8		25.3
Comprehensive income (loss) attributable to ENLC	$	35.3	$	(9.1)

____________________________

(1)Includes tax expense of $1.1 million for the three months ended March 31, 2021.

See accompanying notes to consolidated financial statements.

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ENLINK MIDSTREAM, LLC AND SUBSIDIARIES

Consolidated Statements of Changes in Members’ Equity

(In millions)


	Common Units			Accumulated Other Comprehensive Loss		Non-Controlling Interest		Total
	$		Units	$		$		$
	(Unaudited)
Balance, December 31, 2021	$	1,325.8	484.3	$	(1.4)	$	1,662.6	$	2,987.0
Conversion of restricted units for common units, net of units withheld for taxes	(4.2)		1.2	—		—		(4.2)
Unit-based compensation	8.1		—	—		—		8.1
Contributions from non-controlling interests	—		—	—		7.3		7.3
Distributions	(56.4)		—	—		(34.6)		(91.0)
Unrealized gain on designated cash flow hedge	—		—	0.1		—		0.1
Redemption of Series B Preferred Units	—		—	—		(50.5)		(50.5)
Common units repurchased	(17.0)		(2.1)	—		—		(17.0)
Net income	35.2		—	—		30.8		66.0
Balance, March 31, 2022	$	1,291.5	483.4	$	(1.3)	$	1,615.6	$	2,905.8

See accompanying notes to consolidated financial statements.

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ENLINK MIDSTREAM, LLC AND SUBSIDIARIES

Consolidated Statements of Changes in Members’ Equity (Continued)

(In millions)


	Common Units			Accumulated Other Comprehensive Loss		Non-Controlling Interest		Total		Redeemable Non-Controlling Interest (Temporary Equity)
	$		Units	$		$		$		$
	(Unaudited)
Balance, December 31, 2020	$	1,508.8	489.4	$	(15.3)	$	1,719.5	$	3,213.0	$	—
Conversion of restricted units for common units, net of units withheld for taxes	(1.2)		0.7	—		—		(1.2)		—
Unit-based compensation	6.5		—	—		—		6.5		—
Contributions from non-controlling interests	—		—	—		0.9		0.9		—
Distributions	(47.1)		—	—		(25.8)		(72.9)		(0.2)
Unrealized gain on designated cash flow hedge (1)	—		—	3.6		—		3.6		—
Fair value adjustment related to redeemable non-controlling interest	(0.1)		—	—		—		(0.1)		0.2

Net income (loss)	(12.7)		—	—		25.3		12.6		—
Balance, March 31, 2021	$	1,454.2	490.1	$	(11.7)	$	1,719.9	$	3,162.4	$	—

____________________________

(1)Includes tax expense of $1.1 million.

See accompanying notes to consolidated financial statements.

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ENLINK MIDSTREAM, LLC AND SUBSIDIARIES

Consolidated Statements of Cash Flows

(In millions)


	Three Months Ended March 31,
	2022		2021
	(Unaudited)
Cash flows from operating activities:
Net income	$	66.0	$	12.6
Adjustments to reconcile net income to net cash provided by operating activities:

Depreciation and amortization	152.9		151.0
Utility credits redeemed (earned)	5.6		(40.4)
Deferred income tax expense	3.0		1.3
Loss on disposition of assets	5.1		—
Non-cash unit-based compensation	6.6		6.5


Non-cash loss on derivatives recognized in net income	17.3		7.8

Amortization of debt issuance costs and net discount of senior unsecured notes	1.3		1.2


Loss from unconsolidated affiliate investments	1.1		6.3
Other operating activities	(1.1)		1.4
Changes in assets and liabilities:
Accounts receivable, accrued revenue, and other	(139.9)		(18.7)
Natural gas and NGLs inventory, prepaid expenses, and other	(32.8)		1.2
Accounts payable, accrued product purchases, and other accrued liabilities	222.6		95.6
Net cash provided by operating activities	307.7		225.8
Cash flows from investing activities:
Additions to property and equipment	(60.2)		(23.5)



Other investing activities	1.0		4.3
Net cash used in investing activities	(59.2)		(19.2)
Cash flows from financing activities:
Proceeds from borrowings	500.0		200.0
Repayments on borrowings	(550.0)		(300.0)

Distributions to members	(56.4)		(47.1)
Distributions to non-controlling interests	(34.6)		(26.0)
Redemption of Series B Preferred Units	(50.5)		—
Contributions by non-controlling interests	7.3		0.9
Common unit repurchases	(17.0)		—
Other financing activities	(4.8)		(1.2)
Net cash used in financing activities	(206.0)		(173.4)
Net increase in cash and cash equivalents	42.5		33.2
Cash and cash equivalents, beginning of period	26.2		39.6
Cash and cash equivalents, end of period	$	68.7	$	72.8

Supplemental disclosures of cash flow information:
Cash paid for interest	$	29.4	$	17.2

Non-cash investing activities:
Non-cash accrual of property and equipment	$	(0.2)	$	(2.7)

Right-of-use assets obtained in exchange for operating lease liabilities	$	8.5	$	10.2

See accompanying notes to consolidated financial statements.

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ENLINK MIDSTREAM, LLC AND SUBSIDIARIES

Notes to Consolidated Financial Statements

March 31, 2022

(Unaudited)

(1) General

In this report, the terms “Company” or “Registrant,” as well as the terms “ENLC,” “our,” “we,” “us,” or like terms, are sometimes used as abbreviated references to EnLink Midstream, LLC itself or EnLink Midstream, LLC together with its consolidated subsidiaries, including ENLK and its consolidated subsidiaries. References in this report to “EnLink Midstream Partners, LP,” the “Partnership,” “ENLK,” or like terms refer to EnLink Midstream Partners, LP itself or EnLink Midstream Partners, LP together with its consolidated subsidiaries, including the Operating Partnership.

Please read the notes to the consolidated financial statements in conjunction with the Definitions page set forth in this report prior to Part I—Financial Information.

a.Organization of Business

ENLC is a Delaware limited liability company formed in October 2013. The Company’s common units are traded on the New York Stock Exchange under the symbol “ENLC.” ENLC owns all of ENLK’s common units and also owns all of the membership interests of the General Partner. The General Partner manages ENLK’s operations and activities.

b.Nature of Business

We primarily focus on providing midstream energy services, including:

•gathering, compressing, treating, processing, transporting, storing, and selling natural gas;

•fractionating, transporting, storing, and selling NGLs; and

•gathering, transporting, stabilizing, storing, trans-loading, and selling crude oil and condensate, in addition to brine disposal services.

Our midstream energy asset network includes approximately 12,100 miles of pipelines, 22 natural gas processing plants with approximately 5.5 Bcf/d of processing capacity, seven fractionators with approximately 320,000 Bbls/d of fractionation capacity, barge and rail terminals, product storage facilities, purchasing and marketing capabilities, brine disposal wells, a crude oil trucking fleet, and equity investments in certain joint ventures. Our operations are based in the United States, and our sales are derived primarily from domestic customers.

Our natural gas business includes connecting the wells of producers in our market areas to our gathering systems. Our gathering systems consist of networks of pipelines that collect natural gas from points at or near producing wells and transport it to our processing plants or to larger pipelines for further transmission. We operate processing plants that remove NGLs from the natural gas stream that is transported to the processing plants by our own gathering systems or by third-party pipelines. In conjunction with our gathering and processing business, we may purchase natural gas and NGLs from producers and other supply sources and sell that natural gas or NGLs to utilities, industrial consumers, marketers, and pipelines. Our transmission pipelines receive natural gas from our gathering systems and from third-party gathering and transmission systems and deliver natural gas to industrial end-users, utilities, and other pipelines.

Our fractionators separate NGLs into separate purity products, including ethane, propane, iso-butane, normal butane, and natural gasoline. Our fractionators receive NGLs primarily through our transmission lines that transport NGLs from East Texas and from our South Louisiana processing plants. Our fractionators also have the capability to receive NGLs by truck or rail terminals. We also have agreements pursuant to which third parties transport NGLs from our West Texas and Central Oklahoma operations to our NGL transmission lines that then transport the NGLs to our fractionators. In addition, we have NGL storage capacity to provide storage for customers.

Our crude oil and condensate business includes the gathering and transmission of crude oil and condensate via pipelines, barges, rail, and trucks, in addition to condensate stabilization and brine disposal. We also purchase crude oil and condensate from producers and other supply sources and sell that crude oil and condensate through our terminal facilities to various markets.

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ENLINK MIDSTREAM, LLC AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

(Unaudited)

Across our businesses, we primarily earn our fees through various fee-based contractual arrangements, which include stated fee-only contract arrangements or arrangements with fee-based components where we purchase and resell commodities in connection with providing the related service and earn a net margin as our fee. We earn our net margin under our purchase and resell contract arrangements primarily as a result of stated service-related fees that are deducted from the price of the commodities purchased.

(2) Significant Accounting Policies

a.Basis of Presentation

The accompanying consolidated financial statements have been prepared in accordance with the instructions to Form 10-Q, are unaudited, and do not include all the information and disclosures required by GAAP for complete financial statements. All adjustments that, in the opinion of management, are necessary for a fair presentation of the results of operations for the interim periods have been made and are of a recurring nature unless otherwise disclosed herein. The results of operations for such interim periods are not necessarily indicative of results of operations for a full year. These consolidated financial statements should be read in conjunction with the consolidated financial statements and accompanying notes included in our Annual Report on Form 10-K for the year ended December 31, 2021 filed with the Commission on February 16, 2022. Certain reclassifications were made to the financial statements for the prior period to conform to current period presentation. The effect of these reclassifications had no impact on previously reported members’ equity or net income. All significant intercompany balances and transactions have been eliminated in consolidation.

b.Revenue Recognition

The following table summarizes the contractually committed fees (in millions) that we expect to recognize in our consolidated statements of operations, in either revenue or reductions to cost of sales, from MVC and firm transportation contractual provisions. Under these agreements, our customers or suppliers agree to transport or process a minimum volume of commodities on our system over an agreed period. If a customer or supplier fails to meet the minimum volume specified in such agreement, the customer or supplier is obligated to pay a contractually determined fee based upon the shortfall between actual volumes and the contractually stated volumes. All amounts in the table below are determined using the contractually-stated MVC or firm transportation volumes specified for each period multiplied by the relevant deficiency or reservation fee. Actual amounts could differ due to the timing of revenue recognition or reductions to cost of sales resulting from make-up right provisions included in our agreements, as well as due to nonpayment or nonperformance by our customers. We record revenue under MVC and firm transportation contracts during periods of shortfall when it is known that the customer cannot, or will not, make up the deficiency. These fees do not represent the shortfall amounts we expect to collect under our MVC and firm transportation contracts, as we generally do not expect volume shortfalls to equal the full amount of the contractual MVCs and firm transportation contracts during these periods.


Contractually Committed Fees	Commitments
2022 (remaining)	$	110.3
2023	132.0
2024	112.0
2025	65.1
2026	57.9
Thereafter	289.7
Total	$	767.0

(3) Intangible Assets

Intangible assets associated with customer relationships are amortized on a straight-line basis over the expected period of benefits of the customer relationships, which ranged from 10 to 20 years at the time the intangible assets were originally recorded. The weighted average amortization period for intangible assets is 14.9 years.

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ENLINK MIDSTREAM, LLC AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

(Unaudited)

The following table represents our change in carrying value of intangible assets (in millions):


	Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount
Three Months Ended March 31, 2022
Customer relationships, beginning of period	$	1,844.8	$	(795.1)	$	1,049.7
Amortization expense	—		(32.8)		(32.8)

Customer relationships, end of period	$	1,844.8	$	(827.9)	$	1,016.9

Amortization expense was $32.8 million and $30.9 million for the three months ended March 31, 2022 and 2021, respectively.

The following table summarizes our estimated aggregate amortization expense for the next five years and thereafter (in millions):


2022 (remaining)	$	95.6
2023	127.6
2024	127.6
2025	110.2
2026	106.3
Thereafter	449.6

Total	$	1,016.9

(4) Related Party Transactions

(a) Transactions with Cedar Cove JV

For the three months ended March 31, 2022 and 2021, we recorded cost of sales of $10.6 million and $3.2 million, respectively, related to our purchase of residue gas and NGLs from the Cedar Cove JV subsequent to processing at our Central Oklahoma processing facilities. Additionally, we had accounts payable balances related to transactions with the Cedar Cove JV of $5.8 million and $1.6 million at March 31, 2022 and December 31, 2021, respectively.

(b) Transactions with GIP

General and Administrative Expenses. For the three months ended March 31, 2021, we recorded general and administrative expenses of $0.1 million related to personnel secondment services provided by GIP. We did not record any expenses related to transactions with GIP for the three months ended March 31, 2022.

GIP Repurchase Agreement. On February 15, 2022, we and GIP entered into an agreement pursuant to which we are repurchasing, on a quarterly basis, a pro rata portion of the ENLC common units held by GIP, based upon the number of common units purchased by us during the applicable quarter from public unitholders under our common unit repurchase program. The number of ENLC common units held by GIP that we repurchase in any quarter is calculated such that GIP’s then-existing economic ownership percentage of our outstanding common units is maintained after our repurchases of common units from public unitholders are taken into account, and the per unit price we pay to GIP is the average per unit price paid by us for the common units repurchased from public unitholders. See “Note 8—Members’ Equity” for additional information on the activity relating to the GIP repurchase agreement.

Management believes the foregoing transactions with related parties were executed on terms that are fair and reasonable to us. The amounts related to related party transactions are specified in the accompanying consolidated financial statements.

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Notes to Consolidated Financial Statements (Continued)

(Unaudited)

(5) Long-Term Debt

As of March 31, 2022 and December 31, 2021, long-term debt consisted of the following (in millions):


	March 31, 2022						December 31, 2021
	Outstanding Principal		Premium (Discount)		Long-Term Debt		Outstanding Principal		Premium (Discount)		Long-Term Debt

Consolidated Credit Facility due 2024 (1)	$	—	$	—	$	—	$	15.0	$	—	$	15.0
AR Facility due 2024 (2)	315.0		—		315.0		350.0		—		350.0
ENLK’s 4.40% Senior unsecured notes due 2024	521.8		0.6		522.4		521.8		0.7		522.5
ENLK’s 4.15% Senior unsecured notes due 2025	720.8		(0.4)		720.4		720.8		(0.4)		720.4
ENLK’s 4.85% Senior unsecured notes due 2026	491.0		(0.3)		490.7		491.0		(0.3)		490.7
ENLC’s 5.625% Senior unsecured notes due 2028	500.0		—		500.0		500.0		—		500.0
ENLC’s 5.375% Senior unsecured notes due 2029	498.7		—		498.7		498.7		—		498.7
ENLK’s 5.60% Senior unsecured notes due 2044	350.0		(0.2)		349.8		350.0		(0.2)		349.8
ENLK’s 5.05% Senior unsecured notes due 2045	450.0		(5.4)		444.6		450.0		(5.5)		444.5
ENLK’s 5.45% Senior unsecured notes due 2047	500.0		(0.1)		499.9		500.0		(0.1)		499.9
Debt classified as long-term	$	4,347.3	$	(5.8)	4,341.5		$	4,397.3	$	(5.8)	4,391.5
Debt issuance cost (3)					(26.5)						(27.8)

Long-term debt, net of unamortized issuance cost					$	4,315.0					$	4,363.7

____________________________

(1)Bears interest based on Prime and/or LIBOR plus an applicable margin. The effective interest rate was 3.9% at December 31, 2021.

(2)Bears interest based on LMIR and/or LIBOR plus an applicable margin. The effective interest rate was 1.5% and 1.2% at March 31, 2022 and December 31, 2021, respectively.

(3)Net of accumulated amortization of $19.7 million and $18.4 million at March 31, 2022 and December 31, 2021, respectively.

Consolidated Credit Facility

The Consolidated Credit Facility permits ENLC to borrow up to $1.75 billion on a revolving credit basis and includes a $500.0 million letter of credit subfacility. There were no outstanding borrowings under the Consolidated Credit Facility and $44.3 million outstanding letters of credit as of March 31, 2022.

At March 31, 2022, we were in compliance with and expect to be in compliance with the financial covenants of the Consolidated Credit Facility for at least the next twelve months.

AR Facility

On October 21, 2020, EnLink Midstream Funding, LLC, a bankruptcy-remote special purpose entity that is an indirect subsidiary of ENLC (the “SPV”) entered into the AR Facility. We are the primary beneficiary of the SPV and we consolidate its assets and liabilities, which consist primarily of billed and unbilled accounts receivable of $882.6 million. As of March 31, 2022, the AR Facility had a borrowing base of $350.0 million and there were $315.0 million in outstanding borrowings under the AR Facility.

At March 31, 2022, we were in compliance with and expect to be in compliance with the financial covenants of the AR Facility for at least the next twelve months.

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ENLINK MIDSTREAM, LLC AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

(Unaudited)

(6) Income Taxes

The components of our income tax expense are as follows (in millions):


	Three Months Ended March 31,
	2022		2021
Current income tax expense	$	(0.2)	$	(0.1)
Deferred income tax expense	(3.0)		(1.3)
Income tax expense	$	(3.2)	$	(1.4)

The following schedule reconciles income tax expense and the amount calculated by applying the statutory U.S. federal tax rate to income before non-controlling interest and income taxes (in millions):


	Three Months Ended March 31,
	2022		2021
Expected income tax benefit (expense) based on federal statutory rate	$	(8.1)	$	2.4
State income tax benefit (expense), net of federal benefit	(1.1)		0.2
Unit-based compensation (1)	(2.0)		(2.5)

Change in valuation allowance	7.1		(1.2)
Other	0.9		(0.3)
Income tax expense	$	(3.2)	$	(1.4)

____________________________

(1)Related to book-to-tax differences recorded upon the vesting of restricted incentive units.

Deferred Tax Assets and Liabilities

Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. The deferred tax liabilities, net of deferred tax assets, are included in “Deferred tax liability, net” in the consolidated balance sheets. As of March 31, 2022, we had $140.5 million of deferred tax liabilities, net of $484.8 million of deferred tax assets, which included a $144.5 million valuation allowance. As of December 31, 2021, we had $137.5 million of deferred tax liabilities, net of $481.6 million of deferred tax assets, which included a $151.6 million valuation allowance.

A valuation allowance is established to reduce deferred tax assets if all, or some portion, of such assets will more than likely not be realized. We have established a valuation allowance primarily related to federal and state tax operating loss carryforwards for which we do not believe a tax benefit is more likely than not to be realized. As of March 31, 2022, management believes it is more likely than not that the Company will realize the benefits of the deferred tax assets, net of valuation allowance.

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ENLINK MIDSTREAM, LLC AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

(Unaudited)

(7) Certain Provisions of the ENLK Partnership Agreement

a.Series B Preferred Units

As of March 31, 2022 and December 31, 2021, there were 54,168,359 and 57,501,693 Series B Preferred Units issued and outstanding, respectively.

In January 2022, we redeemed 3,333,334 Series B Preferred Units for total consideration of $50.5 million plus accrued distributions. In addition, upon such redemption, a corresponding number of ENLC Class C Common Units were automatically cancelled. The redemption price represents 101% of the preferred units’ par value. In connection with the Series B Preferred Unit redemption, we have agreed with the holders of the Series B Preferred Units that we will pay cash in lieu of making a quarterly PIK distribution through the distribution declared for the fourth quarter of 2022.

A summary of the distribution activity relating to the Series B Preferred Units during the three months ended March 31, 2022 and 2021 is provided below:


Declaration period	Distribution paid as additional Series B Preferred Units	Cash Distribution (in millions)		Date paid/payable
2022
Fourth Quarter of 2021	—	$	19.2	February 11, 2022 (1)
First Quarter of 2022	—	$	17.5	May 13, 2022 (2)



2021
Fourth Quarter of 2020	150,494	$	16.9	February 12, 2021
First Quarter of 2021	150,871	$	17.0	May 14, 2021

____________________________

(1)In December 2021 and January 2022, we paid $0.9 million and $1.0 million, respectively, of accrued distributions on the Series B Preferred Units redeemed.

(2)In January 2022, we paid $0.3 million of accrued distributions on the Series B Preferred Units redeemed. The remaining distribution of $17.2 million related to the first quarter of 2022 is payable May 13, 2022.

b.Series C Preferred Units

As of March 31, 2022 and December 31, 2021, there were 400,000 Series C Preferred Units issued and outstanding, respectively. There was no distribution activity related to the Series C Preferred Units during the three months ended March 31, 2022 and 2021.

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ENLINK MIDSTREAM, LLC AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

(Unaudited)

(8) Members’ Equity

a.Common Unit Repurchase Program

In November 2020, the board of directors of the Managing Member authorized a common unit repurchase program for the repurchase of up to $100.0 million of outstanding ENLC common units and reauthorized such program in April 2021. The Board reauthorized ENLC’s common unit repurchase program and reset the amount available for repurchases of outstanding common units at up to $100.0 million effective January 1, 2022. Repurchases under the common unit repurchase program will be made, in accordance with applicable securities laws, from time to time in open market or private transactions and may be made pursuant to a trading plan meeting the requirements of Rule 10b5-1 under the Exchange Act. The repurchases will depend on market conditions and may be discontinued at any time.

For the three months ended March 31, 2022, ENLC repurchased 2,093,842 outstanding ENLC common units for an aggregate cost, including commissions, of $17.0 million, or an average of $8.12 per common unit. For the three months ended March 31, 2021, we did not repurchase any outstanding ENLC common units.

b.GIP Repurchase Agreement

On May 2, 2022, we repurchased 675,095 ENLC common units held by GIP for an aggregate cost of $6.0 million, or an average of $8.92 per common unit. These units represent GIP’s pro rata share of the aggregate number of common units repurchased by us under our common unit repurchase program during the period from February 15, 2022 (the date on which the Repurchase Agreement was signed) through March 31, 2022. The $8.92 price per common unit is the average per unit price paid by us for the common units repurchased from public unitholders during the same period.

c.Earnings Per Unit and Dilution Computations

As required under ASC 260, Earnings Per Share, unvested share-based payments that entitle employees to receive non-forfeitable distributions are considered participating securities for earnings per unit calculations. The following table reflects the computation of basic and diluted earnings per unit for the periods presented (in millions, except per unit amounts):


	Three Months Ended March 31,
	2022		2021
Distributed earnings allocated to:
Common units (1)	$	54.4	$	45.9
Unvested restricted units (1)	1.1		1.1
Total distributed earnings	$	55.5	$	47.0
Undistributed loss allocated to:
Common units	$	(19.9)	$	(58.3)
Unvested restricted units	(0.4)		(1.4)
Total undistributed loss	$	(20.3)	$	(59.7)
Net income (loss) attributable to ENLC allocated to:
Common units	$	34.5	$	(12.4)
Unvested restricted units	0.7		(0.3)
Total net income (loss) attributable to ENLC	$	35.2	$	(12.7)
Net income (loss) attributable to ENLC per unit:
Basic	$	0.07	$	(0.03)
Diluted	$	0.07	$	(0.03)

____________________________

(1)Represents distribution activity consistent with the distribution activity table below.

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ENLINK MIDSTREAM, LLC AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

(Unaudited)

The following are the unit amounts used to compute the basic and diluted earnings per unit for the periods presented (in millions):


	Three Months Ended March 31,
	2022	2021
Basic weighted average units outstanding:
Weighted average common units outstanding	484.0	490.0

Diluted weighted average units outstanding:
Weighted average basic common units outstanding	484.0	490.0
Dilutive effect of non-vested restricted units (1)	6.6	—

Total weighted average diluted common units outstanding	490.6	490.0

____________________________

(1)All common unit equivalents were antidilutive for the three months ended March 31, 2021, since a net loss existed for that period.

All outstanding units were included in the computation of diluted earnings per unit and weighted based on the number of days such units were outstanding during the period presented.

d.Distributions

A summary of our distribution activity related to the ENLC common units for the three months ended March 31, 2022 and 2021, respectively, is provided below:


Declaration period	Distribution/unit		Date paid/payable
2022
Fourth Quarter of 2021	$	0.11250	February 11, 2022
First Quarter of 2022	$	0.11250	May 13, 2022



2021
Fourth Quarter of 2020	$	0.09375	February 12, 2021
First Quarter of 2021	$	0.09375	May 14, 2021

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ENLINK MIDSTREAM, LLC AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

(Unaudited)

(9) Employee Incentive Plans

a.Long-Term Incentive Plans

We account for unit-based compensation in accordance with ASC 718, which requires that compensation related to all unit-based awards be recognized in the consolidated financial statements. Unit-based compensation cost is valued at fair value at the date of grant, and that grant date fair value is recognized as expense over each award’s requisite service period with a corresponding increase to equity or liability based on the terms of each award and the appropriate accounting treatment under ASC 718.

Amounts recognized on the consolidated financial statements with respect to these plans are as follows (in millions):


	Three Months Ended March 31,
	2022		2021
Cost of unit-based compensation charged to operating expense	$	1.6	$	1.7
Cost of unit-based compensation charged to general and administrative expense	5.0		4.8
Total unit-based compensation expense	$	6.6	$	6.5
Amount of related income tax benefit recognized in net income (1)	$	1.6	$	1.5

____________________________

(1)For the three months ended March 31, 2022 and 2021, the amount of related income tax benefit recognized in net income excluded $2.0 million and $2.5 million, respectively, of income tax expense related to book-to-tax differences recorded upon the vesting of restricted units.

b.ENLC Restricted Incentive Units

ENLC restricted incentive units were valued at their fair value at the date of grant, which is equal to the market value of ENLC common units on such date. A summary of the restricted incentive unit activity for the three months ended March 31, 2022 is provided below:


	Three Months Ended March 31, 2022
ENLC Restricted Incentive Units:	Number of Units		Weighted Average Grant-Date Fair Value
Non-vested, beginning of period	7,507,471		$	5.46
Granted (1)	1,761,711		8.87
Vested (1)(2)	(1,032,738)		10.35
Forfeited	(2,022)		3.71
Non-vested, end of period	8,234,422		$	5.58
Aggregate intrinsic value, end of period (in millions)	$	79.5

____________________________

(1)Restricted incentive units typically vest at the end of three years. In March 2022, ENLC granted 193,935 restricted incentive units with a fair value of $1.7 million. These restricted incentives units vested immediately and are included in the restricted incentive units granted and vested line items.

(2)Vested units included 278,866 units withheld for payroll taxes paid on behalf of employees.

A summary of the restricted incentive units’ aggregate intrinsic value (market value at vesting date) and fair value of units vested (market value at date of grant) for the three months ended March 31, 2022 and 2021 is provided below (in millions):


	Three Months Ended March 31,
ENLC Restricted Incentive Units:	2022		2021
Aggregate intrinsic value of units vested	$	7.6	$	3.0
Fair value of units vested	$	10.7	$	10.2

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ENLINK MIDSTREAM, LLC AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

(Unaudited)

As of March 31, 2022, there were $24.5 million of unrecognized compensation costs that related to non-vested ENLC restricted incentive units. These costs are expected to be recognized over a weighted-average period of 2.0 years.

c.ENLC Performance Units

ENLC grants performance awards under the 2014 Plan. The performance award agreements provide that the vesting of performance units (i.e., performance-based restricted incentive units) granted thereunder is dependent on the achievement of certain performance goals over the applicable performance period. At the end of the vesting period, recipients receive distribution equivalents, if any, with respect to the number of performance units vested. The vesting of such units ranges from zero to 200% of the units granted depending on the extent to which the related performance goals are achieved over the relevant performance period.

The following table presents a summary of the performance units:


	Three Months Ended March 31, 2022
ENLC Performance Units:	Number of Units		Weighted Average Grant-Date Fair Value
Non-vested, beginning of period	3,574,827		$	6.40
Granted	598,286		11.45
Vested (1)	(708,361)		15.57

Non-vested, end of period	3,464,752		$	5.40
Aggregate intrinsic value, end of period (in millions)	$	33.4

____________________________

(1)Vested units included 273,357 units withheld for payroll taxes paid on behalf of employees.

A summary of the performance units’ aggregate intrinsic value (market value at vesting date) and fair value of units vested (market value at date of grant) for the three months ended March 31, 2022 and 2021 is provided below (in millions).


	Three Months Ended March 31,
ENLC Performance Units:		2022		2021
Aggregate intrinsic value of units vested		$	5.6	$	0.6
Fair value of units vested		$	11.0	$	4.4

As of March 31, 2022, there were $15.5 million of unrecognized compensation costs that related to non-vested ENLC performance units. These costs are expected to be recognized over a weighted-average period of 1.9 years.

The following table presents a summary of the grant-date fair value assumptions by performance unit grant date:


ENLC Performance Units:	March 2022 (1)		January 2021
Grant-date fair value	$	11.90	$	4.70
Beginning TSR price	$	8.83	$	3.71
Risk-free interest rate	2.15