enlc-20220630

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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 June 30, 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 July 28, 2022, the Registrant had 478,933,388 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	33

3.	Quantitative and Qualitative Disclosures About Market Risk	54

4.	Controls and Procedures	56

	PART II—OTHER INFORMATION

1.	Legal Proceedings	57

1A.	Risk Factors	57

2.	Unregistered Sales of Equity Securities and Use of Proceeds	57

5.	Other Information	57

6.	Exhibits	58

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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.
Agua Blanca Pipeline						The Agua Blanca Pipeline is a Delaware Basin intrastate natural gas pipeline servicing portions of Culberson, Loving, Pecos, Reeves, Ward, and Winkler counties and is owned by a joint venture between WhiteWater Midstream, LLC and MPLX LP.
Amarillo Rattler Acquisition						On April 30, 2021, we completed the acquisition of Amarillo Rattler, LLC, the owner of a gathering and processing system located in the Midland Basin.
AR Facility						An accounts receivable securitization facility of up to $500 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 August 1, 2025, 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.
BKV						BKV Corporation.
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.
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.

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General Partner						EnLink Midstream GP, LLC, the general partner of 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.
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.

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.
Revolving Credit Facility						A $1.40 billion unsecured revolving credit facility entered into by ENLC that matures on June 3, 2027, which includes a $500.0 million letter of credit subfacility. The Revolving Credit Facility is guaranteed by ENLK.

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.
SOFR						Secured overnight financing rate.
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 upon maturity on December 10, 2021.

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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)


	June 30, 2022		December 31, 2021
	(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents	$	18.1	$	26.2
Accounts receivable:
Trade, net of allowance for bad debt of $0.3 and $0.3, respectively	101.1		94.9
Accrued revenue and other	913.7		693.3

Fair value of derivative assets	95.6		22.4
Other current assets	159.7		83.6
Total current assets	1,288.2		920.4
Property and equipment, net of accumulated depreciation of $4,570.4 and $4,332.0, respectively	6,259.0		6,388.3
Intangible assets, net of accumulated amortization of $859.8 and $795.1, respectively	985.0		1,049.7

Investment in unconsolidated affiliates	53.0		28.0
Fair value of derivative assets	—		0.2
Other assets, net	93.6		96.6
Total assets	$	8,678.8	$	8,483.2
LIABILITIES AND MEMBERS’ EQUITY
Current liabilities:
Accounts payable and drafts payable	$	177.9	$	139.6

Accrued gas, NGLs, condensate, and crude oil purchases (1)	768.9		521.5
Fair value of derivative liabilities	88.7		34.9
Other current liabilities	184.1		202.9
Total current liabilities	1,219.6		898.9
Long-term debt, net of unamortized issuance cost	4,320.0		4,363.7

Other long-term liabilities	93.3		93.9
Deferred tax liability, net	138.7		137.5
Fair value of derivative liabilities	1.2		2.2

Members’ equity:
Members’ equity (479,825,804 and 484,277,258 units issued and outstanding, respectively)	1,293.3		1,325.8
Accumulated other comprehensive loss	(1.3)		(1.4)
Non-controlling interest	1,614.0		1,662.6
Total members’ equity	2,906.0		2,987.0
Commitments and contingencies (Note 15)
Total liabilities and members’ equity	$	8,678.8	$	8,483.2

____________________________

(1)Includes related party accounts payable balances of $5.7 million and $1.6 million at June 30, 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 June 30,				Six Months Ended June 30,
	2022		2021		2022		2021
	(Unaudited)
Revenues:
Product sales	$	2,370.5	$	1,235.6	$	4,414.4	$	2,358.5

Midstream services	225.6		209.3		440.6		418.2

Gain (loss) on derivative activity	4.5		(38.2)		(26.7)		(121.6)
Total revenues	2,600.6		1,406.7		4,828.3		2,655.1
Operating costs and expenses:
Cost of sales, exclusive of operating expenses and depreciation and amortization (1)	2,105.1		1,055.1		3,899.6		1,989.8
Operating expenses	128.9		96.8		249.8		153.1
Depreciation and amortization	159.0		151.9		311.9		302.9

(Gain) loss on disposition of assets	(0.4)		(0.3)		4.7		(0.3)
General and administrative	28.4		26.1		57.4		52.1


Total operating costs and expenses	2,421.0		1,329.6		4,523.4		2,497.6
Operating income	179.6		77.1		304.9		157.5
Other income (expense):
Interest expense, net of interest income	(55.5)		(60.0)		(110.6)		(120.0)
Loss on extinguishment of debt	(0.5)		—		(0.5)		—
Loss from unconsolidated affiliate investments	(1.2)		(1.3)		(2.3)		(7.6)
Other income	0.2		0.2		0.3		0.1
Total other expense	(57.0)		(61.1)		(113.1)		(127.5)
Income before non-controlling interest and income taxes	122.6		16.0		191.8		30.0
Income tax benefit (expense)	1.3		(6.6)		(1.9)		(8.0)
Net income	123.9		9.4		189.9		22.0
Net income attributable to non-controlling interest	38.6		31.0		69.4		56.3
Net income (loss) attributable to ENLC	$	85.3	$	(21.6)	$	120.5	$	(34.3)
Net income (loss) attributable to ENLC per unit:
Basic common unit	$	0.18	$	(0.04)	$	0.25	$	(0.07)
Diluted common unit	$	0.17	$	(0.04)	$	0.25	$	(0.07)

____________________________

(1)Includes related party cost of sales of $9.1 million and $3.6 million for the three months ended June 30, 2022 and 2021, respectively, and $19.7 million and $6.8 million for the six months ended June 30, 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 June 30,				Six Months Ended June 30,
	2022		2021		2022		2021
	(Unaudited)
Net income	$	123.9	$	9.4	$	189.9	$	22.0
Unrealized gain on designated cash flow hedge (1)	—		3.7		0.1		7.3
Comprehensive income	123.9		13.1		190.0		29.3
Comprehensive income attributable to non-controlling interest	38.6		31.0		69.4		56.3
Comprehensive income (loss) attributable to ENLC	$	85.3	$	(17.9)	$	120.6	$	(27.0)

____________________________

(1)Includes tax expense of $1.1 million and $2.2 million for the three and six months ended June 30, 2021, respectively.

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
Conversion of restricted units for common units, net of units withheld for taxes	(0.2)		—	—		—		(0.2)
Unit-based compensation	5.7		—	—		—		5.7
Contributions from non-controlling interests	—		—	—		2.0		2.0
Distributions	(55.3)		—	—		(42.2)		(97.5)

Common units repurchased	(33.7)		(3.6)	—		—		(33.7)
Net income	85.3		—	—		38.6		123.9
Balance, June 30, 2022	$	1,293.3	479.8	$	(1.3)	$	1,614.0	$	2,906.0

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		—
Conversion of restricted units for common units, net of units withheld for taxes	(0.2)		0.1	—		—		(0.2)		—
Unit-based compensation	6.4		—	—		—		6.4		—
Contributions from non-controlling interests	—		—	—		1.0		1.0		—
Distributions	(46.7)		—	—		(36.0)		(82.7)		—
Unrealized gain on designated cash flow hedge (2)	—		—	3.7		—		3.7		—
Common units repurchased	(2.0)		(0.3)	—		—		(2.0)		—
Net income (loss)	(21.6)		—	—		31.0		9.4		—
Balance, June 30, 2021	$	1,390.1	489.9	$	(8.0)	$	1,715.9	$	3,098.0	$	—

____________________________

(1)Includes tax expense of $1.1 million.

(2)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)


	Six Months Ended June 30,
	2022		2021
	(Unaudited)
Cash flows from operating activities:
Net income	$	189.9	$	22.0
Adjustments to reconcile net income to net cash provided by operating activities:

Depreciation and amortization	311.9		302.9
Utility credits redeemed (earned)	11.6		(43.8)
Deferred income tax expense	1.2		7.9
(Gain) Loss on disposition of assets	4.7		(0.3)
Non-cash unit-based compensation	12.3		12.9
Amortization of designated cash flow hedge	0.1		6.0
Payments to terminate interest rate swaps	—		(1.3)
Non-cash (gain) loss on derivatives recognized in net income	(18.6)		34.2
Loss on extinguishment of debt	0.5		—
Amortization of debt issuance costs and net discount of senior unsecured notes	2.6		2.5


Loss from unconsolidated affiliate investments	2.3		7.6
Other operating activities	(2.0)		(2.5)
Changes in assets and liabilities:
Accounts receivable, accrued revenue, and other	(226.7)		(61.4)
Natural gas and NGLs inventory, prepaid expenses, and other	(83.2)		(47.8)
Accounts payable, accrued product purchases, and other accrued liabilities	276.0		163.3
Net cash provided by operating activities	482.6		402.2
Cash flows from investing activities:
Additions to property and equipment	(124.1)		(62.5)


Contributions to unconsolidated affiliate investments	(26.6)		—
Acquisitions, net of cash acquired	—		(55.0)
Distribution from unconsolidated affiliate investments in excess of earnings	0.4		3.7
Other investing activities	1.0		1.6
Net cash used in investing activities	(149.3)		(112.2)
Cash flows from financing activities:
Proceeds from borrowings	1,135.0		539.5
Repayments on borrowings	(1,177.0)		(679.5)

Distributions to members	(111.7)		(93.8)
Distributions to non-controlling interests	(76.8)		(62.0)
Payment of installment payable for the Amarillo Rattler Acquisition	(10.0)		—
Redemption of Series B Preferred Units	(50.5)		—
Contributions from non-controlling interests	9.3		1.9
Common unit repurchases	(50.7)		(2.0)
Other financing activities	(9.0)		(0.9)
Net cash used in financing activities	(341.4)		(296.8)
Net decrease in cash and cash equivalents	(8.1)		(6.8)
Cash and cash equivalents, beginning of period	26.2		39.6
Cash and cash equivalents, end of period	$	18.1	$	32.8

Supplemental disclosures of cash flow information:
Cash paid for interest	$	107.8	$	97.1
Cash paid for income taxes	$	0.8	$	0.2
Non-cash investing activities:
Non-cash accrual of property and equipment	$	(1.6)	$	6.9
Non-cash acquisitions	$	—	$	16.5
Right-of-use assets obtained in exchange for operating lease liabilities	$	15.3	$	10.7

See accompanying notes to consolidated financial statements.

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ENLINK MIDSTREAM, LLC AND SUBSIDIARIES

Notes to Consolidated Financial Statements

June 30, 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.

As of June 30, 2022, 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)	$	69.6
2023	119.7
2024	99.9
2025	67.0
2026	59.9
Thereafter	290.9
Total	$	707.0

(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
Six Months Ended June 30, 2022
Customer relationships, beginning of period	$	1,844.8	$	(795.1)	$	1,049.7
Amortization expense	—		(64.7)		(64.7)

Customer relationships, end of period	$	1,844.8	$	(859.8)	$	985.0

Amortization expense was $31.9 million and $31.6 million for the three months ended June 30, 2022 and 2021, respectively, and $64.7 million and $62.5 million for the six months ended June 30, 2022 and 2021, respectively.

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


2022 (remaining)	$	63.7
2023	127.6
2024	127.6
2025	110.2
2026	106.3
Thereafter	449.6

Total	$	985.0

(4) Related Party Transactions

(a) Transactions with Cedar Cove JV

For the three and six months ended June 30, 2022, we recorded cost of sales of $9.1 million and $19.7 million, respectively, and for the three and six months ended June 30, 2021, we recorded cost of sales of $3.6 million and $6.8 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 $5.7 million and $1.6 million at June 30, 2022 and December 31, 2021, respectively.

(b) Transactions with GIP

General and Administrative Expenses. For the three and six months ended June 30, 2021, we recorded general and administrative expenses of $0.1 million and $0.2 million, respectively, related to personnel secondment services provided by GIP. We did not record any expenses related to transactions with GIP for the three and six months ended June 30, 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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ENLINK MIDSTREAM, LLC AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

(Unaudited)

(5) Long-Term Debt

As of June 30, 2022 and December 31, 2021, long-term debt consisted of the following (in millions):


	June 30, 2022						December 31, 2021
	Outstanding Principal		Premium (Discount)		Long-Term Debt		Outstanding Principal		Premium (Discount)		Long-Term Debt

Revolving Credit Facility due 2027 (1)	$	—	$	—	$	—	$	15.0	$	—	$	15.0
AR Facility due 2025 (2)	325.0		—		325.0		350.0		—		350.0
ENLK’s 4.40% Senior unsecured notes due 2024	519.8		0.5		520.3		521.8		0.7		522.5
ENLK’s 4.15% Senior unsecured notes due 2025	720.8		(0.3)		720.5		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