An abundance of EnLink Midstream updates

The EnLink Midstream companies (EnLink or EnLink Midstream), EnLink Midstream Partners, LP (the partnership or ENLK) and EnLink Midstream, LLC (the General Partner or ENLC), have announced a refined guidance outlook for full year 2016, reported financial results for the second quarter of 2016, and provided an operational update.

"EnLink delivered another strong quarter of solid operating and financial results as we continue to execute our strategic plan," said Barry E. Davis, EnLink Chairman, President, and Chief Executive Officer. "We successfully executed a series of transformative acquisitions over the last two years, which significantly enhanced the diversification, integration, and growth potential of our asset platforms in the best oil and gas producing basins in the US. As a result of increased producer activity and continued demand, we are experiencing material volume momentum across our core growth areas of Central Oklahoma, the Permian Basin and Louisiana. Looking ahead, our priority of maintaining a strong balance sheet remains unchanged. We have confidence in the strength of our employees and business model and, as a result, refined our guidance for consolidated adjusted EBITDA to a range of US$750 million to US$800 million."

2Q16 — EnLink Midstream Partners, LP financial results

The partnership's net income was US$3.2 million and net cash provided by operating activities was US$110.5 million in the second quarter of 2016, compared with net income of US$55.4 million and net cash provided by operating activities of US$120.6 million in the second quarter of 2015. The partnership's operating income was US$46.4 million in the second quarter of 2016 compared with operating income of US$72.5 million in the second quarter of 2015.

The partnership's gross operating margin was US$300.8 million in the second quarter of 2016 compared with gross operating margin of US$306.3 million in the second quarter of 2015. The partnership realised adjusted EBITDA of US$187.4 million and distributable cash flow of US$150.9 million in the second quarter of 2016, compared with adjusted EBITDA of US$174.9 million and distributable cash flow of US$134.1 million in the second quarter of 2015. The resulting distribution coverage ratio for the second quarter of 2016 was approximately 1.03x on the declared distribution of US$0.39 per partnership unit. Adjusted EBITDA, distributable cash flow and gross operating margin are non-GAAP measures and are explained in greater detail under "Non-GAAP Financial Information.”

The partnership's operating and reporting segments are based principally upon geographic regions served and consist of the following: the Texas segment, which includes natural gas gathering, processing, transmission and fractionation operations located in north Texas and west Texas; the Louisiana segment, which includes pipelines, processing plants and NGL assets located in Louisiana; the Oklahoma segment, which includes natural gas gathering and processing operations located in Central Oklahoma; the Crude and Condensate segment, which includes rail, truck, pipeline and barge facilities to deliver crude and condensate in Texas, Louisiana, and the Ohio River Valley and brine disposal wells in the Ohio River Valley; and the corporate segment, which includes operating activity for intersegment eliminations and gains or losses from derivative activities.

2Q16 — EnLink Midstream, LLC financial results

The General Partner reported net income of US$1.2 million for the second quarter of 2016 compared with net income of US$44.6 million in the second quarter of 2015. The General Partner's cash available for distribution was US$49.8 million in the second quarter of 2016 compared with cash available for distribution of US$52.0 million in the second quarter of 2015. The resulting distribution coverage ratio for the second quarter of 2016 was approximately 1.07x on the declared distribution of US$0.255 per General Partner unit. Cash available for distribution is a non-GAAP measure and is explained in greater detail under "Non-GAAP Financial Information."

Strategic partnership formed with NGP

The partnership recently formed a strategic joint venture with NGP, an energy-focused private equity firm with deep producer relationships, to accelerate growth in the prolific liquids-rich Delaware Basin. At formation, the partnership and NGP own 50.1% and 49.9% of the joint venture, respectively.

Contributions and committed capital to the joint venture amount to approximately US$800 million in the aggregate. The partnership contributed approximately US$230 million of existing Delaware Basin assets to the joint venture and committed approximately US$285 million in capital to fund potential future development projects and potential acquisitions. NGP committed an aggregate of approximately US$400 million of capital, including an initial contribution of approximately US$115 million, which the joint venture distributed to the partnership at the formation of the joint venture as reimbursement for NGP's proportionate interest in capital spent to date on existing assets and ongoing projects.

As part of this agreement, NGP granted the partnership graded call rights beginning in 2021 to acquire increasing portions of NGP's interest in the joint venture, eventually up to 100% of NGP's interest, at a price based upon a predetermined valuation methodology.

The first project the joint venture will undertake is the completion of Lobo II, which includes the installation of a cryogenic natural gas processing facility with capacity up to 120 million ft³/d and approximately 70 miles of natural gas and liquids gathering pipeline infrastructure in Loving County, Texas, and Lea and Eddy counties in New Mexico. The expansion is anchored by long-term commitments from major producers and is expected to be operational by year-end 2016.

The Greater Chickadee crude oil gathering project

The Partnership previously announced plans in June 2016 to invest US$70 million to US$80 million on the construction of a new crude oil gathering system in the Midland Basin called the Greater Chickadee crude oil gathering project. This project will include over 150 miles of high and low pressure pipeline that will transport crude oil volumes to major market outlets in the Midland, Texas, area.

The project is supported by long-term, fee-based agreements with top producers and includes approximately 35 000 dedicated acres in Upton County. The initial phase of the project is expected to be operational in the second half of 2016 with full service expected in early 2017. It is anticipated that approximately US$60 million of the construction costs will be incurred during 2016.

More information on the financial updates can be found here.

Edited from source by Stephanie Roker

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