enlc-20230331

Table of Contents

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, 2023

☐ 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 27, 2023, the Registrant had 465,989,285 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	32

3.	Quantitative and Qualitative Disclosures About Market Risk	52

4.	Controls and Procedures	54

	PART II—OTHER INFORMATION

1.	Legal Proceedings	55

1A.	Risk Factors	55

2.	Unregistered Sales of Equity Securities and Use of Proceeds	55

6.	Exhibits	56

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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.

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.
ASC						The Financial Accounting Standards Board Accounting Standards Codification.
ASC 718						ASC 718, Compensation—Stock Compensation.
ASC 815						ASC 815, Derivatives and Hedging.
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.
Barnett Shale						A natural gas producing shale reservoir located in North Texas.
Barnett Shale Acquisition						On July 1, 2022, we acquired all of the equity interest in the gathering and processing assets of Crestwood Equity Partners LP located in the Barnett Shale.
Bbl						Barrel.
Bbtu						Billion British thermal units.
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.
Central Oklahoma Acquisition						On December 19, 2022, we acquired gathering and processing assets located in Central Oklahoma, including approximately 900 miles of lean and rich gas gathering pipeline and two processing plants with 280 MMcf/d of total processing capacity.
CFTC						U.S. Commodity Futures Trading Commission.

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 together with its consolidated subsidiaries.
ENLC Class C Common Units						A class of non-economic ENLC common units equal to the number of Series B Preferred Units in order to provide certain voting rights with respect to ENLC to the holders of such Series B Preferred Units.
ENLK						EnLink Midstream Partners, LP or, when applicable, EnLink Midstream Partners, LP together with its consolidated subsidiaries.
Exchange Act						The Securities Exchange Act of 1934, as amended.

FCDTCs						Futures and Cleared Derivatives Transactions Customer Agreements.
Federal Reserve						The Board of Governors of the Federal Reserve System of the United States.
GAAP						Generally accepted accounting principles in the United States of America.

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Gal						Gallon.
GCF						Gulf Coast Fractionators, which owns an NGL fractionator in Mont Belvieu, Texas. We own 38.75% of GCF. The GCF assets were temporarily idled to reduce operating expenses in 2021, but are expected to resume operations in 2024.
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.
Matterhorn JV						A joint venture with WhiteWater Midstream, LLC, Devon Energy Corporation, and MPLX LP. The Matterhorn JV is expected to construct a pipeline designed to transport up to 2.5 Bcf/d of natural gas through approximately 490 miles of 42-inch pipeline from the Waha Hub in West Texas to Katy, Texas.


Midland Basin						A large sedimentary basin in West Texas.
MMbbls						Million barrels.
MMbtu						Million British thermal units.
MMcf						Million cubic feet.
MMgals						Million gallons.
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.
OPIS						Oil Price Information Service.
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, 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.
SPV						EnLink Midstream Funding, LLC, a bankruptcy-remote special purpose entity that is an indirect subsidiary of ENLC.
STACK						Sooner Trend Anadarko Basin Canadian and Kingfisher Counties in Oklahoma.

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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, 2023		December 31, 2022
	(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents	$	72.8	$	22.6
Accounts receivable:
Trade receivables (1)	86.3		89.2
Accrued revenue and other	537.5		636.0

Fair value of derivative assets	68.5		68.4
Other current assets	94.0		166.6
Total current assets	859.1		982.8
Property and equipment, net of accumulated depreciation of $4,898.8 and $4,774.5, respectively	6,543.4		6,556.0
Intangible assets, net of accumulated amortization of $955.5 and $923.6, respectively	889.3		921.2

Investment in unconsolidated affiliates	140.4		90.2
Fair value of derivative assets	13.6		2.9
Other assets, net	100.6		97.9
Total assets	$	8,546.4	$	8,651.0
LIABILITIES AND MEMBERS’ EQUITY
Current liabilities:
Accounts payable and drafts payable	$	111.4	$	126.9

Accrued gas, NGLs, condensate, and crude oil purchases (2)	360.0		476.0
Fair value of derivative liabilities	41.1		42.9
Other current liabilities	195.9		229.6
Total current liabilities	708.4		875.4
Long-term debt, net of unamortized issuance cost	4,828.0		4,723.5

Other long-term liabilities	96.6		94.0
Deferred tax liability, net	53.2		42.7
Fair value of derivative liabilities	18.3		2.7

Members’ equity:
Members’ equity (467,137,866 and 468,980,630 units issued and outstanding, respectively)	1,238.7		1,306.4
Accumulated other comprehensive loss	(1.2)		—
Non-controlling interest	1,604.4		1,606.3
Total members’ equity	2,841.9		2,912.7
Commitments and contingencies (Note 16)
Total liabilities and members’ equity	$	8,546.4	$	8,651.0

____________________________

(1)There was no allowance for bad debt at March 31, 2023. Includes allowance for bad debt of $0.1 million at December 31, 2022.

(2)Includes related party accounts payable balances of $1.2 million and $2.5 million at March 31, 2023 and December 31, 2022, 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,
	2023		2022
	(Unaudited)
Revenues:
Product sales	$	1,476.3	$	2,043.9
Midstream services	279.3		215.0
Gain (loss) on derivative activity	11.9		(31.2)
Total revenues	1,767.5		2,227.7
Operating costs and expenses:
Cost of sales, exclusive of operating expenses and depreciation and amortization (1)	1,271.9		1,794.5
Operating expenses	132.4		120.9
Depreciation and amortization	160.4		152.9

(Gain) loss on disposition of assets	(0.4)		5.1
General and administrative	29.5		29.0

Total operating costs and expenses	1,593.8		2,102.4
Operating income	173.7		125.3
Other income (expense):
Interest expense, net of interest income	(68.5)		(55.1)

Loss from unconsolidated affiliate investments	(0.1)		(1.1)
Other income	—		0.1
Total other expense	(68.6)		(56.1)
Income before non-controlling interest and income taxes	105.1		69.2
Income tax expense	(10.9)		(3.2)
Net income	94.2		66.0
Net income attributable to non-controlling interest	36.0		30.8
Net income attributable to ENLC	$	58.2	$	35.2
Net income attributable to ENLC per unit:
Basic common unit	$	0.12	$	0.07
Diluted common unit	$	0.12	$	0.07

____________________________

(1)Includes related party cost of sales of $1.5 million and $10.6 million for the three months ended March 31, 2023 and 2022, 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,
	2023		2022
	(Unaudited)
Net income	$	94.2	$	66.0
Unrealized gain (loss) on designated cash flow hedge (1)	(1.2)		0.1
Comprehensive income	93.0		66.1
Comprehensive income attributable to non-controlling interest	36.0		30.8
Comprehensive income attributable to ENLC	$	57.0	$	35.3

____________________________

(1)Includes tax benefit of $0.4 million for the three months ended March 31, 2023.

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, 2022	$	1,306.4	469.0	$	—	$	1,606.3	$	2,912.7
Conversion of unit-based awards for common units, net of units withheld for taxes	(16.8)		2.5	—		—		(16.8)
Unit-based compensation	4.0		—	—		—		4.0
Contributions from non-controlling interests	—		—	—		8.4		8.4
Distributions	(61.7)		—	—		(42.4)		(104.1)
Unrealized loss on designated cash flow hedge (1)	—		—	(1.2)		—		(1.2)


Repurchase of Series C Preferred Units	—		—	—		(3.9)		(3.9)
Common units repurchased	(51.4)		(4.4)	—		—		(51.4)
Net income	58.2		—	—		36.0		94.2
Balance, March 31, 2023	$	1,238.7	467.1	$	(1.2)	$	1,604.4	$	2,841.9

____________________________

(1)Includes tax benefit of $0.4 million for the three months ended March 31, 2023.

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
	$		Units	$		$		$
	(Unaudited)
Balance, December 31, 2021	$	1,325.8	484.3	$	(1.4)	$	1,662.6	$	2,987.0
Conversion of unit-based awards 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 Cash Flows

(In millions)


	Three Months Ended March 31,
	2023		2022
	(Unaudited)
Cash flows from operating activities:
Net income	$	94.2	$	66.0
Adjustments to reconcile net income to net cash provided by operating activities:

Depreciation and amortization	160.4		152.9
Utility credits redeemed	1.4		5.6
Deferred income tax expense	10.8		3.0
(Gain) loss on disposition of assets	(0.4)		5.1
Non-cash unit-based compensation	4.0		6.6

Non-cash loss on derivatives recognized in net income	1.4		17.3

Amortization of debt issuance costs and net discount of senior unsecured notes	1.5		1.3


Loss from unconsolidated affiliate investments	0.1		1.1
Other operating activities	0.3		(1.1)
Changes in assets and liabilities:
Accounts receivable, accrued revenue, and other	101.1		(139.9)
Natural gas and NGLs inventory, prepaid expenses, and other	68.3		(32.8)
Accounts payable, accrued product purchases, and other accrued liabilities	(171.0)		222.6
Net cash provided by operating activities	272.1		307.7
Cash flows from investing activities:
Additions to property and equipment	(100.7)		(60.2)


Contributions to unconsolidated affiliate investments	(49.7)		—

Other investing activities	0.4		1.0
Net cash used in investing activities	(150.0)		(59.2)
Cash flows from financing activities:
Proceeds from borrowings	1,173.0		500.0
Repayments on borrowings	(1,067.4)		(550.0)



Distributions to members	(61.7)		(56.4)
Distributions to non-controlling interests	(42.4)		(34.6)
Payment to redeem mandatorily redeemable non-controlling interest	(10.5)		—
Redemption of Series B Preferred Units	—		(50.5)
Repurchase of Series C Preferred Units	(3.9)		—
Contributions from non-controlling interests	8.4		7.3
Common unit repurchases	(51.4)		(17.0)
Conversion of unit-based awards for common units, net of units withheld for taxes	(16.8)		(4.2)
Other financing activities	0.8		(0.6)
Net cash used in financing activities	(71.9)		(206.0)
Net increase in cash and cash equivalents	50.2		42.5
Cash and cash equivalents, beginning of period	22.6		26.2
Cash and cash equivalents, end of period	$	72.8	$	68.7

Supplemental disclosures of cash flow information:
Cash paid for interest	$	62.2	$	29.4

Non-cash investing activities:

Right-of-use assets obtained in exchange for operating lease liabilities	$	10.4	$	8.5
Non-cash accrual of property and equipment	$	13.4	$	(0.2)

See accompanying notes to consolidated financial statements.

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ENLINK MIDSTREAM, LLC AND SUBSIDIARIES

Notes to Consolidated Financial Statements

March 31, 2023

(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.” As of March 31, 2023, GIP, through GIP III Stetson I, L.P. and GIP III Stetson II, L.P, owns 41.3% of the outstanding limited liability company interests in ENLC. In addition to GIP’s equity interests in ENLC, GIP III Stetson I, L.P. maintains control over the Managing Member through its ownership of all of the equity interests in the Managing Member. 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 March 31, 2023, our midstream energy asset network includes approximately 13,600 miles of pipelines, 26 natural gas processing plants with approximately 6.0 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.

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ENLINK MIDSTREAM, LLC AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

(Unaudited)

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.

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, 2022 filed with the Commission on February 15, 2023. 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
2023 (remaining)	$	98.0
2024	114.9
2025	101.8
2026	100.7
2027	83.8
Thereafter	1,034.1
Total	$	1,533.3

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ENLINK MIDSTREAM, LLC AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

(Unaudited)

c.Redeemable Non-Controlling Interest

During the first quarter of 2020, the non-controlling interest holder in one of our non-wholly owned subsidiaries exercised its option to require us to purchase its remaining interest. At the time of the exercise, we and the interest holder did not agree on the value of the interest and a lawsuit was filed by the interest holder. As part of a settlement effected with the interest holder in January 2023, we settled the redemption of the mandatorily redeemable non-controlling interest for $10.5 million.

(3) Acquisition

Central Oklahoma Acquisition

On December 19, 2022, we completed the Central Oklahoma Acquisition. The acquired assets include approximately 900 miles of lean and rich gas gathering pipeline and two processing plants with 280 MMcf/d of total processing capacity. We completed this acquisition to increase the scale and efficiency of our Central Oklahoma assets.

The following table presents the preliminary fair value of the identified assets received and liabilities assumed at the acquisition date (in millions):


Consideration
Cash (including working capital payment)	$	100.9
Contingent consideration	1.3
Total consideration	$	102.2

Purchase price allocation (1)
Assets acquired:
Current assets	$	6.0
Property and equipment	97.1
Other assets, net (2)	0.9
Liabilities assumed:
Current liabilities	(1.4)
Other long-term liabilities (2)	(0.4)
Net assets acquired	$	102.2

____________________________

(1)The purchase price allocation was based on preliminary estimates and assumptions, which are subject to change within the measurement period (up to one year from the acquisition date), as we finalize the valuations of the assets acquired and liabilities assumed upon the closing of the acquisition.

(2)“Other assets, net” and “Other long-term liabilities” consist of the right-of-use assets and lease liabilities, respectively, obtained through the Central Oklahoma Acquisition.

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ENLINK MIDSTREAM, LLC AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

(Unaudited)

Contingent Consideration. The following table represents our change in carrying value of the Amarillo Rattler Acquisition and Central Oklahoma Acquisition contingent consideration liabilities for the periods presented (in millions):


	Three Months Ended March 31,
	2023		2022
Amarillo Rattler Acquisition contingent consideration
Contingent consideration liability, beginning of period (1)	$	4.2	$	6.9
Change in fair value	0.5		—
Contingent consideration liability, end of period	4.7		6.9

Central Oklahoma Acquisition contingent consideration
Contingent consideration liability, beginning of period (2)	1.3		—
Change in fair value	0.2		—
Contingent consideration liability, end of period	1.5		—

Total contingent consideration
Contingent consideration liability, beginning of period (1)(2)	5.5		6.9
Change in fair value	0.7		—
Contingent consideration liability, end of period	$	6.2	$	6.9

____________________________

(1)The contingent consideration for the Amarillo Rattler Acquisition was recorded on April 30, 2021.

(2)The contingent consideration for the Central Oklahoma Acquisition was recorded on December 19, 2022.

Pro Forma of Acquisitions for the Three Months Ended March 31, 2022

The following unaudited pro forma condensed consolidated financial information (in millions) for the three months ended March 31, 2022 gives effect to the Barnett Shale Acquisition on July 1, 2022 and the Central Oklahoma Acquisition on December 19, 2022 as if each of the acquisitions had occurred on January 1, 2022.

The unaudited pro forma condensed consolidated financial information has been included for comparative purposes only and is not necessarily indicative of the results that might have occurred had the transactions taken place on the dates indicated and is not intended to be a projection of future results.


	Three Months Ended March 31, 2022
Pro forma total revenues	$	2,256.9
Pro forma net income	$	75.2

(4) 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.

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, 2023
Customer relationships, beginning of period	$	1,844.8	$	(923.6)	$	921.2
Amortization expense	—		(31.9)		(31.9)

Customer relationships, end of period	$	1,844.8	$	(955.5)	$	889.3

Amortization expense was $31.9 million and $32.8 million for the three months ended March 31, 2023 and 2022, respectively.

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ENLINK MIDSTREAM, LLC AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

(Unaudited)

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


2023 (remaining)	$	95.7
2024	127.6
2025	110.2
2026	106.3
2027	106.3
Thereafter	343.2

Total	$	889.3

(5) Related Party Transactions

(a) Transactions with Cedar Cove JV

For the three months ended March 31, 2023 and 2022, we recorded cost of sales of $1.5 million and $10.6 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 $1.2 million and $2.5 million at March 31, 2023 and December 31, 2022, respectively.

(b) Transactions with GIP

General and Administrative Expenses. We did not record any expenses related to transactions with GIP and its affiliates for the three months ended March 31, 2023 and 2022.

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)

(6) Long-Term Debt

As of March 31, 2023 and December 31, 2022, long-term debt consisted of the following (in millions):


	March 31, 2023						December 31, 2022
	Outstanding Principal		Premium (Discount)		Long-Term Debt		Outstanding Principal		Premium (Discount)		Long-Term Debt

Revolving Credit Facility due 2027 (1)	$	505.0	$	—	$	505.0	$	255.0	$	—	$	255.0
AR Facility due 2025 (2)	355.6		—		355.6		500.0		—		500.0
ENLK’s 4.40% Senior unsecured notes due 2024	97.9		—		97.9		97.9		—		97.9
ENLK’s 4.15% Senior unsecured notes due 2025	421.6		(0.1)		421.5		421.6		(0.1)		421.5
ENLK’s 4.85% Senior unsecured notes due 2026	491.0		(0.2)		490.8		491.0		(0.2)		490.8
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
ENLC’s 6.50% Senior unsecured notes due 2030	700.0		—		700.0		700.0		—		700.0
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		(5.1)		444.9		450.0		(5.2)		444.8
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	$	4,869.8	$	(5.7)	4,864.1		$	4,764.2	$	(5.8)	4,758.4
Debt issuance cost (3)					(36.1)						(34.9)

Long-term debt, net of unamortized issuance cost					$	4,828.0					$	4,723.5

____________________________

(1)The effective interest rate was 6.9% and 6.5% at March 31, 2023 and December 31, 2022, respectively.

(2)The effective interest rate was 5.8% and 5.3% at March 31, 2023 and December 31, 2022, respectively.

(3)Net of accumulated amortization of $16.5 million and $15.1 million at March 31, 2023 and December 31, 2022, respectively.

Revolving Credit Facility

The Revolving Credit Facility permits ENLC to borrow up to $1.40 billion on a revolving credit basis and includes a $500.0 million letter of credit subfacility. There were $505.0 million in outstanding borrowings under the Revolving Credit Facility and $43.6 million in outstanding letters of credit as of March 31, 2023.

At March 31, 2023, we were in compliance with and expect to be in compliance with the financial covenants of the Revolving Credit Facility for at least the next twelve months.

AR Facility

On October 21, 2020, 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 $589.4 million as of March 31, 2023. As of March 31, 2023, the AR Facility had a borrowing base of $355.6 million and there were $355.6 million in outstanding borrowings under the AR Facility.

At March 31, 2023, 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.

Senior Unsecured Notes

On April 3, 2023, we completed the sale of an additional $300.0 million aggregate principal amount of 6.500% senior notes due 2030 (the “Additional Notes”) at 99% of their face value. The Additional Notes were offered as an additional issue of our existing 6.500% senior notes due 2030 that we issued on August 31, 2022 in an aggregate principal amount of $700.0 million. Net proceeds of approximately $294.5 million were used to repay a portion of the borrowings under the Revolving Credit Facility. The Additional Notes are fully and unconditionally guaranteed by ENLK.

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ENLINK MIDSTREAM, LLC AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

(Unaudited)

(7) Income Taxes

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


	Three Months Ended March 31,
	2023		2022
Current income tax expense	$	(0.1)	$	(0.2)
Deferred income tax expense	(10.8)		(3.0)
Income tax expense	$	(10.9)	$	(3.2)

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,
	2023		2022
Expected income tax expense based on federal statutory rate	$	(14.5)	$	(8.1)
State income tax expense, net of federal benefit	(1.8)		(1.1)
Unit-based compensation (1)	6.5		(2.0)

Change in valuation allowance	—		7.1

Other	(1.1)		0.9
Income tax expense	$	(10.9)	$	(3.2)

____________________________

(1)Related to book-to-tax differences recorded upon the vesting of unit-based awards.

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, 2023, we had $53.2 million of deferred tax liabilities, net of $731.9 million of deferred tax assets. As of December 31, 2022, we had $42.7 million of deferred tax liabilities, net of $714.1 million of deferred tax assets.

We provide a valuation allowance, if necessary, to reduce deferred tax assets, if all, or some portion, of such assets will more than likely not be realized. We previously established a valuation allowance, primarily related to federal and state tax operating loss carryforwards for which we did not believe a tax benefit was more likely than not to be realized. As of March 31, 2023, we did not record a valuation allowance and management believes it is more likely than not that the Company will realize the benefits of the deferred tax assets.

(8) Certain Provisions of the ENLK Partnership Agreement

a.Series B Preferred Units

As of March 31, 2023 and December 31, 2022, there were 54,168,359 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 represented 101% of the preferred units’ par value. In connection with the Series B Preferred Unit redemption, we agreed with the holders of the Series B Preferred Units to pay cash in lieu of making a quarterly distribution in-kind of additional Series B Preferred Units (the “PIK Distribution”) through the distribution declared for the fourth quarter of 2022. Beginning with the quarterly distribution declared for the first quarter of 2023, we will resume paying a PIK distribution.

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ENLINK MIDSTREAM, LLC AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

(Unaudited)

Income is allocated to the Series B Preferred Units in an amount equal to the quarterly distribution with respect to the period earned. A summary of the distribution activity relating to the Series B Preferred Units during the three months ended March 31, 2023 and 2022 is provided below:


Declaration period	PIK Distribution	Cash distribution (in millions)		Date paid/payable
2023
Fourth Quarter of 2022	—	$	17.3	February 13, 2023
First Quarter of 2023	135,421	$	15.2	May 12, 2023




2022
Fourth Quarter of 2021	—	$	19.2	February 11, 2022 (1)
First Quarter of 2022	—	$	17.5	May 13, 2022 (2)

____________________________

(1)In December 2021 and January 2022, we paid $0.9 million and $1.0 million, respectively, of accrued distributions related to the fourth quarter of 2021 on redeemed Series B Preferred Units. The remaining distribution of $17.3 million related to the fourth quarter of 2021 was paid on February 11, 2022.

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

For tax purposes, holders of Series B Preferred Units are allocated items of gross income from ENLK in respect of each Series B Preferred Unit until the cumulative amount of gross income so allocated equals the cumulative amount of distributions made in respect of such Series B Preferred Unit, but not in excess of such Series B Preferred Unit’s pro rata share of the net income of ENLK for the allocation year (the “Allocation Cap”). Because of the application of the Allocation Cap in 2022 and prior years, as of December 31, 2022, the cumulative amount of distributions made in respect of each Series B Preferred Unit exceeded the cumulative amount of gross income allocated to each Series B Preferred Unit by $5.99 per Series B Preferred Unit (the “Catch-Up Taxable Income Allocation”). As a result, holders of Series B Preferred Units will ultimately be allocated taxable income during future periods equal to the Catch-Up Taxable Income Allocation plus the amount of distributions received in respect of Series B Preferred Units, if ENLK generates positive net income.

b.Series C Preferred Units

Repurchase

In February 2023, we repurchased 4,500 Series C Preferred Units for total consideration of $3.9 million. The repurchase price represented 87% of the preferred units’ par value.

Distributions

Distributions on the Series C Preferred Units accrue quarterly in arrears on the 15th day of March, June, September, and December of each year, in each case, if and when declared by the General Partner out of legally available funds for such purpose. Distributions on the Series C Preferred Units will accumulate for each distribution period at a percentage of the $1,000 liquidation preference per unit equal to the floating rate of the three-month LIBOR plus a spread of 4.11%. Income is allocated to the Series C Preferred Units in an amount equal to the earned distribution for the respective reporting period.

As of March 31, 2023 and December 31, 2022, there were 376,500 and 381,000 Series C Preferred Units issued and outstanding, respectively. ENLK made distributions of $8.4 million to the holders of Series C Preferred Units during the three months ended March 31, 2023. There was no distribution activity for the three months ended March 31, 2022. For the distribution period of March 16, 2023 through June 15, 2023, the distribution rate per unit is 9.051%, which is comprised of the three-month LIBOR rate of 4.941% plus a spread of 4.11%. The distribution of $8.5 million is payable on June 15, 2023 to the holders of Series C Preferred Units.

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ENLINK MIDSTREAM, LLC AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

(Unaudited)

(9) Members’ Equity

a.Common Unit Repurchase Program

In December 2022, the board of directors of the Managing Member (the “Board”) reauthorized our common unit repurchase program for 2023 and set the amount available for repurchases of outstanding common units during 2023 at up to $200.0 million, including repurchases of common units held by GIP. 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.

The following table summarizes our ENLC common unit repurchase activity for the periods presented (in millions, except for unit amounts):


	Three Months Ended March 31,
	2023		2022
Publicly held ENLC common units	2,207,305		2,093,842
ENLC common units held by GIP (1)	2,237,110		—
Total ENLC common units	4,444,415		2,093,842

Aggregate cost for publicly held ENLC common units	$	26.8	$	17.0
Aggregate cost for ENLC common units held by GIP	24.6		—
Total aggregate cost for ENLC common units	$	51.4	$	17.0

Average price paid per publicly held ENLC common unit	$	12.14	$	8.12
Average price paid per ENLC common unit held by GIP (2)	$	11.01	$	—

____________________________

(1)For the three months ended March 31, 2023, the 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 fourth quarter of 2022.

(2)For the three months ended March 31, 2023, the per unit price we paid to GIP was the average per unit price paid by us for publicly held ENLC common units repurchased, less broker commissions, during the fourth quarter of 2022.

Additionally, on May 1, 2023, we repurchased 1,910,877 ENLC common units held by GIP at an aggregate cost of $23.2 million, or an average of $12.12 per common unit. These units represent GIP’s pro rata share of the aggregate number of common units repurchased by us during the three months ended March 31, 2023. The per unit price we paid to GIP was the same as the average per unit price paid by us for publicly held ENLC common units repurchased during the same period, less broker commissions, which were not paid with respect to the GIP units.

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ENLINK MIDSTREAM, LLC AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

(Unaudited)

b.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,
	2023		2022
Distributed earnings allocated to:
Common units (1)	$	58.6	$	54.4
Unvested unit-based awards (1)	0.9		1.1
Total distributed earnings	$	59.5	$	55.5
Undistributed loss allocated to:
Common units	$	(1.3)	$	(19.9)
Unvested unit-based awards	—		(0.4)
Total undistributed loss	$	(1.3)	$	(20.3)