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Enable Midstream announces distribution, capital and cost reductions

Published by , Editorial Assistant
World Pipelines,

Enable Midstream Partners, LP has announced that the partnership is taking significant measures to strengthen its financial position in response to current industry conditions. Taken together, the actions announced today are expected to result in an annualised increase in retained cash flow of approximately US$450 million and position Enable to fully fund its business and reduce total debt in 2020.

The board of directors of Enable’s general partner has approved a 50% reduction in the partnership’s quarterly distribution per common unit from US$0.3305 to US$0.16525. This reduction will result in Enable having nearly US$290 million of additional cash on an annualised basis, providing meaningful financial flexibility and funding for Enable’s capital investment programme.

Enable is reducing 2020 total expansion capital expenditures by US$115 million, or 48%, from the top end of the previously provided outlook, which included capital projects not expected to contribute revenues in 2020. The remaining expansion capital expenditures primarily represent projects to serve incremental firm transportation commitments or to support expected levels of contracted producer activity.

Enable is removing costs from its business and estimates achieving approximately US$35 million of savings in 2020, growing to run-rate savings of approximately US$70 million in 2021 for operation and maintenance and general and administrative expenses. After considering its commitment to safe and reliable operations, technology investment and other projects, Enable expects a reduction in maintenance capital of US$20 million, or 17%, from the midpoint of the previously provided outlook for 2020. Enable also expects to maintain this US$20 million reduction next year.

“Due to the sharp decline in commodity prices and producer activity across our footprint and the future business uncertainty created by the coronavirus pandemic, we are taking decisive action to fortify our financial position, protect our balance sheet and ensure liquidity to navigate these unprecedented market conditions,” said Rod Sailor, president and CEO. “We continue to work with our customers and to refine our costs and capital, not only to maintain maximum financial flexibility but also to ensure a high level of safe and reliable service.

“Enable has implemented a number of initiatives to respond to the risks created by this pandemic and is focused on protecting the health and safety of our employees, customers and the communities where we work and live while providing vital energy infrastructure services during this crisis,” added Sailor.

Enable has ample liquidity available under its US$1.75 billion revolving credit facility. The partnership has no near-term senior notes maturities, with the next senior notes maturity not due until 2024. The partnership’s term loan and revolving credit agreements have scheduled maturity dates in 2022 and 2023, respectively, that could be extended.

During this market downturn, Enable continues to benefit from its scale and diversified asset and customer base. The partnership has long-term relationships with large-cap producers and utilities, and the largest customers on each of Enable’s interstate and intrastate natural gas pipelines are investment-grade utilities. Enable has significant fee-based contracts in both its transportation and storage and gathering and processing segments, and the partnership still expects its gross margin to be over 90% fee-based or hedged for 2020.

Enable plans to provide an update to its 2020 outlook during its first quarter earnings call in May.

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