enlc-20230930

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 September 30, 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 October 26, 2023, the Registrant had 456,851,424 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	36

3.	Quantitative and Qualitative Disclosures About Market Risk	63

4.	Controls and Procedures	65

	PART II—OTHER INFORMATION

1.	Legal Proceedings	66

1A.	Risk Factors	66

2.	Unregistered Sales of Equity Securities and Use of Proceeds	66


5.	Other Information	66

6.	Exhibits	68

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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.

NYMEX						New York Mercantile Exchange.
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)


	September 30, 2023		December 31, 2022
	(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents	$	48.1	$	22.6
Accounts receivable:
Trade receivables (1)	108.6		89.2
Accrued revenue and other	583.5		636.0

Fair value of derivative assets	68.0		68.4
Other current assets	114.2		166.6
Total current assets	922.4		982.8
Property and equipment, net of accumulated depreciation of $5,154.8 and $4,774.5, respectively	6,486.6		6,556.0
Intangible assets, net of accumulated amortization of $1,019.3 and $923.6, respectively	825.5		921.2

Investment in unconsolidated affiliates	144.6		90.2
Fair value of derivative assets	13.8		2.9
Other assets, net	97.6		97.9
Total assets	$	8,490.5	$	8,651.0
LIABILITIES AND MEMBERS’ EQUITY
Current liabilities:
Accounts payable and drafts payable	$	121.9	$	126.9

Accrued gas, NGLs, condensate, and crude oil purchases	436.8		476.0
Fair value of derivative liabilities	54.8		42.9
Current maturities of long-term debt	97.9		—
Other current liabilities	256.5		229.6
Total current liabilities	967.9		875.4
Long-term debt, net of unamortized issuance cost	4,621.4		4,723.5

Other long-term liabilities	90.3		94.0
Deferred tax liability, net	82.8		42.7
Fair value of derivative liabilities	12.2		2.7

Members’ equity:
Members’ equity (457,334,550 and 468,980,630 units issued and outstanding, respectively)	1,080.1		1,306.4
Accumulated other comprehensive income	6.2		—
Non-controlling interest	1,629.6		1,606.3
Total members’ equity	2,715.9		2,912.7
Commitments and contingencies (Note 16)
Total liabilities and members’ equity	$	8,490.5	$	8,651.0

____________________________

(1)There was no allowance for bad debt at September 30, 2023. Includes allowance for bad debt of $0.1 million at December 31, 2022.

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 September 30,				Nine Months Ended September 30,
	2023		2022		2023		2022
	(Unaudited)
Revenues:
Product sales	$	1,488.1	$	2,384.4	$	4,203.7	$	6,798.8
Midstream services	280.1		258.6		838.9		699.2
Gain (loss) on derivative activity	(22.0)		20.5		1.2		(6.2)
Total revenues	1,746.2		2,663.5		5,043.8		7,491.8
Operating costs and expenses:
Cost of sales, exclusive of operating expenses and depreciation and amortization	1,244.7		2,131.1		3,535.6		6,030.7
Operating expenses	143.3		136.8		412.5		386.6
Depreciation and amortization	163.8		162.6		489.5		474.5
Impairments	20.7		—		20.7		—
(Gain) loss on disposition of assets	(0.6)		(0.8)		(1.8)		3.9
General and administrative	30.4		34.5		87.8		91.9

Total operating costs and expenses	1,602.3		2,464.2		4,544.3		6,987.6
Operating income	143.9		199.3		499.5		504.2
Other income (expense):
Interest expense, net of interest income	(67.9)		(60.4)		(205.2)		(171.0)
Loss on extinguishment of debt	—		(5.7)		—		(6.2)
Income (loss) from unconsolidated affiliate investments	1.0		(1.7)		(3.7)		(4.0)
Other income (expense)	(0.6)		0.3		(0.2)		0.6
Total other expense	(67.5)		(67.5)		(209.1)		(180.6)
Income before non-controlling interest and income taxes	76.4		131.8		290.4		323.6
Income tax expense	(10.6)		(15.2)		(40.5)		(17.1)
Net income	65.8		116.6		249.9		306.5
Net income attributable to non-controlling interest	36.3		35.8		107.9		105.2
Net income attributable to ENLC	$	29.5	$	80.8	$	142.0	$	201.3
Net income attributable to ENLC per unit:
Basic common unit	$	0.06	$	0.17	$	0.31	$	0.42
Diluted common unit	$	0.06	$	0.17	$	0.30	$	0.41

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 September 30,				Nine Months Ended September 30,
	2023		2022		2023		2022
	(Unaudited)
Net income	$	65.8	$	116.6	$	249.9	$	306.5
Unrealized gain on designated cash flow hedge (1)	1.7		—		6.2		0.1
Comprehensive income	67.5		116.6		256.1		306.6
Comprehensive income attributable to non-controlling interest	36.3		35.8		107.9		105.2
Comprehensive income attributable to ENLC	$	31.2	$	80.8	$	148.2	$	201.4

____________________________

(1)Includes tax expense of $0.5 million and $1.9 million for the three and nine months ended September 30, 2023, 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 Income (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
Conversion of unit-based awards for common units, net of units withheld for taxes	(0.1)		0.1	—		—		(0.1)
Unit-based compensation	4.5		—	—		—		4.5
Contributions from non-controlling interests	—		—	—		13.7		13.7
Distributions	(58.5)		—	—		(40.1)		(98.6)
Unrealized gain on designated cash flow hedge (1)	—		—	5.7		—		5.7
Adjustment related to the redemption of the mandatorily redeemable non-controlling interest (2)	0.8		—	—		—		0.8


Common units repurchased	(56.1)		(5.2)	—		—		(56.1)
Accrued common unit repurchase (3)	(27.5)		—	—		—		(27.5)
Net income	54.3		—	—		35.6		89.9
Balance, June 30, 2023	1,156.1		462.0	4.5		1,613.6		2,774.2
Conversion of unit-based awards for common units, net of units withheld for taxes	(2.4)		0.3	—		—		(2.4)
Unit-based compensation	5.7		—	—		—		5.7
Contributions from non-controlling interests	—		—	—		29.4		29.4
Distributions	(58.4)		—	—		(49.7)		(108.1)
Unrealized gain on designated cash flow hedge (1)	—		—	1.7		—		1.7


Common units repurchased	(54.9)		(5.0)	—		—		(54.9)
Accrued common unit repurchase (3)	4.5		—	—		—		4.5
Net income	29.5		—	—		36.3		65.8
Balance, September 30, 2023	$	1,080.1	457.3	$	6.2	$	1,629.6	$	2,715.9

____________________________

(1)Includes tax benefit of $0.4 million for the three months ended March 31, 2023, tax expense of $1.8 million for the three months ended June 30, 2023, and tax expense of $0.5 million for the three months ended September 30, 2023.

(2)Relates to book-to-tax differences recorded upon the settlement of the mandatorily redeemable non-controlling interest.

(3)Relates to the repurchase of ENLC common units held by GIP, which are contractually subject to repurchase by ENLC at the end of each quarter and settled in the subsequent quarter. As of September 30, 2023, we accrued $23.0 million in connection with the repurchase of ENLC common units held by GIP. For additional information, see “Note 9—Members’ Equity.”

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 Income (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
Conversion of unit-based awards 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
Conversion of unit-based awards for common units, net of units withheld for taxes	(8.1)		1.4	—		—		(8.1)
Unit-based compensation	11.4		—	—		—		11.4
Contributions from non-controlling interests	—		—	—		4.9		4.9
Distributions	(55.7)		—	—		(38.6)		(94.3)



Common units repurchased	(62.5)		(6.6)	—		—		(62.5)
Net income	80.8		—	—		35.8		116.6
Balance, September 30, 2022	$	1,259.2	474.6	$	(1.3)	$	1,616.1	$	2,874.0

See accompanying notes to consolidated financial statements.

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ENLINK MIDSTREAM, LLC AND SUBSIDIARIES

Consolidated Statements of Cash Flows

(In millions)


	Nine Months Ended September 30,
	2023		2022
	(Unaudited)
Cash flows from operating activities:
Net income	$	249.9	$	306.5
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	489.5		474.5
Utility credits redeemed	1.5		27.9
Deferred income tax expense	39.0		16.1
(Gain) loss on disposition of assets	(1.8)		3.9
Non-cash unit-based compensation	14.2		23.7

Non-cash (gain) loss on derivatives recognized in net income	19.0		(36.5)

Amortization of debt issuance costs and net discount of senior unsecured notes	4.9		3.7


Loss from unconsolidated affiliate investments	3.7		4.0
Impairments	20.7		—
Other operating activities	1.3		1.6
Changes in assets and liabilities:
Accounts receivable, accrued revenue, and other	33.3		(142.7)
Natural gas, NGLs, condensate, and crude oil inventory, prepaid expenses, and other	59.5		(112.9)
Accounts payable, accrued product purchases, and other accrued liabilities	(72.7)		256.1
Net cash provided by operating activities	862.0		825.9
Cash flows from investing activities:
Additions to property and equipment	(320.9)		(213.2)


Contributions to unconsolidated affiliate investments	(58.4)		(46.3)
Acquisition, net of cash acquired	—		(289.5)
Other investing activities	5.9		2.0
Net cash used in investing activities	(373.4)		(547.0)
Cash flows from financing activities:
Proceeds from borrowings	2,538.4		3,431.5
Repayments on borrowings	(2,544.4)		(3,265.0)

Payment of installment payable for the Amarillo Rattler Acquisition	—		(10.0)
Payment of inactive easement commitment	—		(10.0)
Distributions to members	(178.6)		(167.4)
Distributions to non-controlling interests	(132.2)		(115.4)
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	51.5		14.2
Common unit repurchases	(162.4)		(113.2)
Conversion of unit-based awards for common units, net of units withheld for taxes	(19.3)		(12.5)
Other financing activities	(1.7)		(6.8)
Net cash used in financing activities	(463.1)		(305.1)
Net increase (decrease) in cash and cash equivalents	25.5		(26.2)
Cash and cash equivalents, beginning of period	22.6		26.2
Cash and cash equivalents, end of period	$	48.1	$	—

Supplemental disclosures of cash flow information:
Cash paid for interest	$	222.8	$	152.4
Cash paid for income taxes	$	1.5	$	0.7
Non-cash investing activities:

Right-of-use assets obtained in exchange for operating lease liabilities	$	13.3	$	22.0
Non-cash accrual of property and equipment	$	34.4	$	2.5

See accompanying notes to consolidated financial statements.

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ENLINK MIDSTREAM, LLC AND SUBSIDIARIES

Notes to Consolidated Financial Statements

September 30, 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 September 30, 2023, GIP, through GIP III Stetson I, L.P. and GIP III Stetson II, L.P, owns 46.1% 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 September 30, 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)	$	40.6
2024	137.4
2025	117.3
2026	118.0
2027	100.4
Thereafter	1,121.2
Total	$	1,634.9

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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.

d.Property and Equipment

In accordance with ASC 360, Property, Plant, and Equipment, we evaluate long-lived assets of identifiable business activities for potential impairment whenever events or changes in circumstances, or triggering events, indicate that their carrying value may not be recoverable. Triggering events include, but are not limited to, significant changes in the use of the asset group, current operating results that are significantly less than forecasted results, and negative industry or economic trends, including changes in commodity prices, significant adverse changes in legal or regulatory factors, or an expectation that it is more likely than not that an asset group will be sold before the end of its useful life. The carrying amount of a long-lived asset is not recoverable when it exceeds the undiscounted sum of the future cash flows expected to result from the use and eventual disposition of the asset. Estimates of expected future cash flows represent management’s best estimate based on reasonable and supportable assumptions. When the carrying amount of a long-lived asset is not recoverable, an impairment is recognized equal to the excess of the asset’s carrying value over its fair value, which is based on inputs that are not observable in the market, and thus represent Level 3 inputs.

During the third quarter of 2023, we identified changes in our outlook for future cash flows and the anticipated use of certain ORV crude assets in our Louisiana segment, which warranted an interim impairment test. We determined that the carrying amounts of these assets exceeded their fair values, based on market inputs and certain assumptions, and recorded an impairment expense of $20.7 million for the three months ended September 30, 2023.

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

____________________________

(1)“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 September 30,				Nine Months Ended September 30,
	2023		2022		2023		2022
Amarillo Rattler Acquisition contingent consideration
Contingent consideration liability, beginning of period (1)	$	4.6	$	7.2	$	4.2	$	6.9
Change in fair value	0.4		(2.8)		0.8		(2.5)
Contingent consideration liability, end of period	$	5.0	$	4.4	$	5.0	$	4.4

Central Oklahoma Acquisition contingent consideration
Contingent consideration liability, beginning of period (2)	$	1.8	$	—	$	1.3	$	—
Change in fair value	(0.1)		—		0.4		—
Contingent consideration liability, end of period	$	1.7	$	—	$	1.7	$	—

Total contingent consideration
Contingent consideration liability, beginning of period (1)(2)	$	6.4	$	7.2	$	5.5	$	6.9
Change in fair value	0.3		(2.8)		1.2		(2.5)
Contingent consideration liability, end of period	$	6.7	$	4.4	$	6.7	$	4.4

____________________________

(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 and Nine Months Ended September 30, 2022

The following unaudited pro forma condensed consolidated financial information (in millions) for the three and nine months ended September 30, 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 September 30, 2022		Nine Months Ended September 30, 2022
Pro forma total revenues	$	2,677.2	$	7,569.6
Pro forma net income	$	121.8	$	336.2

(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
Nine Months Ended September 30, 2023
Customer relationships, beginning of period	$	1,844.8	$	(923.6)	$	921.2
Amortization expense	—		(95.7)		(95.7)

Customer relationships, end of period	$	1,844.8	$	(1,019.3)	$	825.5

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ENLINK MIDSTREAM, LLC AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

(Unaudited)

Amortization expense was $31.9 million for each of the three months ended September 30, 2023 and 2022, respectively, and $95.7 million and $96.6 million for the nine months ended September 30, 2023 and 2022, respectively.

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


2023 (remaining)	$	31.9
2024	127.6
2025	110.2
2026	106.3
2027	106.3
Thereafter	343.2

Total	$	825.5

(5) Related Party Transactions

(a) Transactions with the Cedar Cove JV

We process gas and purchase the related residue gas and NGLs from the Cedar Cove JV. We recorded the following amounts (in millions) on our consolidated balance sheets related to our transactions with the Cedar Cove JV:


	September 30, 2023		December 31, 2022
Accrued gas, NGLs, condensate, and crude oil purchases	$	0.5	$	2.5

We recorded the following amounts (in millions) on our consolidated statements of operations related to our transactions with the Cedar Cove JV:


	Three Months Ended September 30,				Nine Months Ended September 30,
	2023		2022		2023		2022
Midstream services revenue	$	0.7	$	1.4	$	2.0	$	1.4
Cost of sales	(1.8)		(5.6)		(5.8)		(25.3)

(b) Transactions with GIP

GIP Repurchase Agreement. On February 15, 2022, we entered into an agreement with GIP pursuant to which we agreed to repurchase, 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, less broker commissions, which are not paid with respect to the GIP units. See “Note 9—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)

(6) Long-Term Debt

As of September 30, 2023 and December 31, 2022, long-term debt consisted of the following (in millions):


	September 30, 2023						December 31, 2022
	Outstanding Principal		Premium (Discount)		Long-Term Debt		Outstanding Principal		Premium (Discount)		Long-Term Debt

Revolving Credit Facility due 2027 (1)	$	160.0	$	—	$	160.0	$	255.0	$	—	$	255.0
AR Facility due 2025 (2)	292.0		—		292.0		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		—		421.6		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	1,000.0		(2.8)		997.2		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, including current maturities of long-term debt	$	4,761.2	$	(8.4)	4,752.8		$	4,764.2	$	(5.8)	4,758.4
Debt issuance cost (3)					(33.5)						(34.9)
Less: Current maturities of long-term debt (4)					(97.9)						—
Long-term debt, net of unamortized issuance cost					$	4,621.4					$	4,723.5

____________________________

(1)The effective interest rate was 7.0% and 6.5% at September 30, 2023 and December 31, 2022, respectively.

(2)The effective interest rate was 6.3% and 5.3% at September 30, 2023 and December 31, 2022, respectively.

(3)Net of accumulated amortization of $18.7 million and $15.1 million at September 30, 2023 and December 31, 2022, respectively.

(4)The outstanding balance, net of debt issuance costs, of ENLK’s 4.40% senior unsecured notes as of September 30, 2023 are classified as “Current maturities of long-term debt” on the consolidated balance sheet as these notes mature on April 1, 2024.

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 $160.0 million in outstanding borrowings under the Revolving Credit Facility and $29.6 million in outstanding letters of credit as of September 30, 2023.

At September 30, 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 $652.9 million as of September 30, 2023. As of September 30, 2023, the AR Facility had a borrowing base of $443.4 million and there were $292.0 million in outstanding borrowings under the AR Facility.

At September 30, 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.

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ENLINK MIDSTREAM, LLC AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

(Unaudited)

Senior Unsecured Notes

On April 3, 2023, we completed the sale of an additional $300.0 million aggregate principal amount of 6.50% senior unsecured notes due 2030 (the “Additional Notes”) at 99% of their face value. The Additional Notes were offered as an additional issuance of our existing 6.50% senior unsecured 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.

(7) Income Taxes

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


	Three Months Ended September 30,				Nine Months Ended September 30,
	2023		2022		2023		2022
Current income tax expense	$	(1.2)	$	(0.3)	$	(1.5)	$	(1.0)
Deferred income tax expense	(9.4)		(14.9)		(39.0)		(16.1)
Income tax expense	$	(10.6)	$	(15.2)	$	(40.5)	$	(17.1)

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 September 30,				Nine Months Ended September 30,
	2023		2022		2023			2022
Expected income tax expense based on federal statutory rate	$	(8.4)	$	(20.0)	$	(38.3)		$	(45.9)
State income tax expense, net of federal benefit	(1.1)		(2.6)		(4.9)			(6.2)
Unit-based compensation (1)	0.9		1.4		7.5			(0.6)

Change in valuation allowance	—		10.9		—			39.0

Other	(2.0)		(4.9)		(4.8)			(3.4)
Income tax expense	$	(10.6)	$	(15.2)	$	(40.5)	</