ENLINK MIDSTREAM PARTNERS LP DALLAS, Jan. 23, 2017 /PRNewswire/ -- The EnLink Midstream companies (EnLink or EnLink Midstream), EnLink Midstream Partners, LP (NYSE: ENLK) (the Partnership or ENLK) and EnLink Midstream, LLC (NYSE: ENLC) (the General Partner or ENLC), today announced 2017 guidance and provided an operational update.
Highlights:
-- Net income mid-point for ENLK projected to be $100 million; adjusted
EBITDA mid-point net to ENLK projected to be $850 million. Adjusted
EBITDA is a non-GAAP measure and is explained in greater detail under
"Non-GAAP Financial Information."
-- Net income mid-point for ENLC projected to be $75 million; cash
available for distribution mid-point for ENLC projected to be $220
million. Cash available for distribution is a non-GAAP measure and is
explained in greater detail under "Non-GAAP Financial Information."
-- Recent commercial success for EnLink in the STACK fuels additional
growth and deepens relationships with premier STACK players.
"In 2017, we continue to focus on executing our strategic growth plan." said Barry E. Davis, Chairman and Chief Executive Officer of EnLink. "Our assets are strategically positioned in top U.S. basins where we're experiencing strong producer activity and, as a result, are further expanding our operational reach and service offerings to meet increasing demand."
"We expect the momentum of recent volume growth to continue throughout 2017 and beyond. Our current plan is to exit 2017 with an annual adjusted EBITDA run-rate net to ENLK between $925 million and $950 million, with an expectation of continued strengthening throughout 2018 of producer activity related to our core growth basins."
ENLK Full-Year 2017 Financial Guidance:
-- Net income projected to range from $80 million to $120 million.
-- Adjusted EBITDA net to ENLK projected to range from $815 million to $885
million, representing more than 10 percent annual mid-point growth over
the prior year's mid-point guidance provided in 2016. 2017 guidance
reflects a reduction to adjusted EBITDA related to announced non-core
asset sales. As previously disclosed in 2016, EnLink estimated that
these non-core assets would provide adjusted EBITDA contributions in
2016 of approximately $25 million.
-- Gross operating margin generated by operations in Central Oklahoma and
the Permian basin are projected to significantly more than offset gross
operating margin declines in mature basins. As a result of forecasted
growth, Central Oklahoma is projected to replace North Texas as ENLK's
largest operating region contributor in 2017. Net income and adjusted
EBITDA contribution outlook from Central Oklahoma assets acquired during
2016 continues to meet or exceed expectations. Gross operating margin
is a non-GAAP measure and is explained in greater detail under "Non-GAAP
Financial Information."
-- Distributable cash flow projected to range from $590 million to $650
million. Distributable cash flow is a non-GAAP measure and is explained
in greater detail under "Non-GAAP Financial Information."
-- Projected to exit 2017 with a distribution coverage ratio in excess of
1.0, assuming flat distributions throughout 2017. EnLink expects to
continue to build excess coverage during 2017, supporting the potential
to resume distribution growth during 2018.
-- Preferred units begin 7.5 percent annual cash distributions plus a
paid-in-kind distribution for the third quarter of 2017, with no impact
to the incentive distribution rights cash outflow, assuming no
conversion to common units during 2017.
-- Projected to exit 2017 with debt to adjusted EBITDA ratio in the range
of 3.75 to 4.0, with no near-term debt maturities. Committed to
maintaining strong liquidity position with ample revolver capacity.
-- Growth capital expenditures funded solely by ENLK projected to range
from $505 million to $645 million for 2017. Mid-single-digit adjusted
EBITDA multiple projected to be achieved from 2017 organic capital
investments. Total growth capital expenditures projected to range from
$590 million to $750 million, including contributions from joint venture
partners and ENLC of approximately $85 million to $105 million. Growth
capital expenditure ranges exclude the $250 million installment payments
related to the acquisition in January of 2016.
-- Proceeds from planned and completed asset sales and at-the-market equity
issuances are expected to generate sufficient capital for the equity
funded portion of ENLK's 2017 growth capital program.
ENLC Full-Year 2017 Financial Guidance:
-- Net income attributable to ENLC projected to range from $45 million to
$105 million.
-- Cash available for distribution projected to range from $215 million to
$225 million.
-- Projected to exit 2017 with a distribution coverage ratio in the range
of 1.1 to 1.2. Flat distributions expected throughout 2017, with
potential distribution growth resumption with excess coverage.
Management is considering the potential to recommend the resumption of
distribution growth at ENLC before resuming growth at ENLK in light of
excess coverage at ENLC.
-- Growth capital expenditures for ENLC's interest in Central Oklahoma
assets to range from $60 million to $70 million, with mid-single-digit
adjusted EBITDA multiple projected to be achieved from organic 2017
investments.
-- Cash income taxes projected to be approximately $5 million per year for
each of 2017, 2018 and 2019.
The foregoing guidance information reflects a West Texas Intermediate Crude Oil (WTI) price range of $40.00 per barrel (bbl) to $60.00/bbl, with an average price of $50.00/bbl. Guidance for 2017 also reflects a Henry Hub price range of $2.50 per million British Thermal Units ($/MMBtu) to $3.75/MMBtu, with an average price of $3.00/MMBtu. Net income and adjusted EBITDA ranges are based on commodity price movement, as well as business opportunities and risks. The foregoing guidance information for 2017 is projected, and accordingly, remains subject to changes that could be significant. See the section titled "Forward-Looking Statements" of this press release.
EnLink Operational Update:
Central Oklahoma:
-- In the fourth quarter of 2016, EnLink entered into a new agreement with
an affiliate of Newfield Exploration Co. (Newfield). This new agreement
dedicates a portion of Newfield's acreage in the Anadarko STACK play to
EnLink. The agreement deepens EnLink's relationship with Newfield, a
premier STACK producer and demonstrates the reach of EnLink's extensive
gathering and processing infrastructure.
-- Also in the fourth quarter of 2016, Kinder Morgan Inc.'s (KMI) Midstream
segment and ENLK formed a joint venture company, Cedar Cove Midstream
LLC (Cedar Cove JV), to provide gas gathering and processing services
within an area of mutual interest in Blaine County, Oklahoma, located in
the heart of the STACK play. The joint venture currently has gathering
and processing dedications of over 50,000 gross acres, and the system is
expected to be expanded over the next several years as acreage is
further developed. In the fourth quarter of 2016, ENLK contributed
approximately $40 million in cash and other consideration for a 30
percent ownership interest in Cedar Cove JV's gathering and compression
assets, and provides gas processing services to the joint venture.
-- Throughout 2017, EnLink plans to increase gas processing capacity in
Central Oklahoma at the Chisholm complex by 400 million cubic feet per
day (MMcf/d). EnLink's previously announced Chisholm II plant is
expected to be operational in the second quarter of 2017, and the
Chisholm III plant is expected to be operational by the end of 2017.
Once the expansions are completed, EnLink will operate approximately 1
billion cubic feet per day of processing capacity in Central Oklahoma,
and will continue to be one of the largest gas processing providers in
the STACK.
-- Central Oklahoma 2017 volumes are projected to increase by 180 percent
year-over-year on an exit rate to exit rate basis.
Louisiana:
-- EnLink's natural gas liquids (NGL) platform in Louisiana currently has
approximately 10 percent to 15 percent latent capacity and is well
positioned to directly benefit from upcoming growth in Central Oklahoma.
NGL output from the Chisholm II plant is expected to be linked to
EnLink's Louisiana system as the plant becomes operational in the second
quarter of 2017. Current projections estimate that Chisholm II NGL
output will be 20,000 to 30,000 barrels per day, which is projected to
fill available capacity on the Cajun-Sibon pipeline and spur additional
growth opportunities in the region.
-- Construction of the Ascension Pipeline in southeast Louisiana continues
to progress well and is expected to become operational during the second
quarter of 2017. The Ascension Pipeline is a joint venture project with
Marathon Petroleum Corp., and will enhance service offerings in the
region, as well as create opportunities for future bolt-on expansions.
-- Louisiana continues to experience robust demand for natural gas, and
EnLink's assets are expected to continue to capitalize on serving the
needs of new and expanding customers.
Midland Basin:
-- EnLink's expansion of crude oil gathering in Upton and Midland counties
via the Greater Chickadee crude oil gathering system continues to
progress well and is expected to be fully operational during the first
quarter of 2017. The system will have up to 100,000 barrels per day of
capacity and will transport crude oil volumes to several major market
outlets and key hub centers in the Midland area.
-- EnLink's natural gas system, located in the core of the Midland Basin,
completed a cost-effective gas processing expansion in 2016, which
created approximately 30 to 40 percent of additional capacity to support
volume growth as incremental drilling activity continues throughout
2017. EnLink also has the majority of infrastructure in place to
cost-effectively expand the Riptide gas processing facility by 100
MMcf/d as volumes continue to grow.
Delaware Basin:
-- EnLink continues to expand its gas gathering and processing capacity
concurrently with producer customer drilling plans and is focused on
executing a large inventory of organic projects during the upcoming
year. One such project is the expansion of the Lobo II gas processing
facility, which is expected to add an incremental 60 MMcf/d of capacity
during 2017, which will bring total gas processing capacity on the Lobo
system to 155 MMcf/d.
-- EnLink continues to benefit from its joint venture with NGP, which
enhances financial resources available for expansions and acquisitions
as well as enhances EnLink's network of strategic partners.
EnLink Midstream to Hold Earnings Conference Call on February 15, 2017
The General Partner and the Partnership will hold a conference call to discuss fourth quarter and full-year 2016 financial results and 2017 guidance information on Wednesday, February 15, 2017, at 9:00 a.m. Central Time (10:00 a.m. Eastern Time). The dial-in number for the call is 1-855-656-0924. Callers outside the United States should dial 1-412-542-4172. Participants can also preregister for the conference call by navigating to http://dpregister.com/10098998 where they will receive their dial-in information upon completion of their preregistration. Interested parties can access an archived replay of the call on the Investors page of EnLink's website at www.EnLink.com.
About the EnLink Midstream Companies
EnLink provides integrated midstream services across natural gas, crude oil, condensate, and NGL commodities. EnLink operates in several top U.S. basins and is strategically focused on the core growth areas of the Permian's Midland and Delaware basins, Oklahoma's Midcontinent, and Louisiana's Gulf Coast. Headquartered in Dallas, EnLink is publicly traded through EnLink Midstream, LLC (NYSE: ENLC), the General Partner, and EnLink Midstream Partners, LP (NYSE: ENLK), the Master Limited Partnership. Visit www.EnLink.com for more information on how EnLink connects energy to life.
Non-GAAP Financial Information
This press release contains non-generally accepted accounting principle financial measures that we refer to as adjusted EBITDA, distributable cash flow, gross operating margin, and the General Partner's cash available for distribution. We define adjusted EBITDA as net income (loss) plus interest expense, provision for income taxes, depreciation and amortization expense, impairment expense, unit-based compensation, (gain) loss on non-cash derivatives, (gain) loss on disposition of assets, successful transaction costs, accretion expense associated with asset retirement obligations, reimbursed employee costs, non-cash rent and distributions from unconsolidated affiliate investments less payments under onerous performance obligations, non-controlling interest, the General Partner's interest in the adjusted EBITDA of Midstream Holdings prior to the EMH drop downs and income (loss) from unconsolidated affiliate investments. We define distributable cash flow as adjusted EBITDA (defined above), net to the Partnership, less interest expense (excluding amortization of the Tall Oak acquisition installment payable discount), adjustments for the mandatorily redeemable non-controlling interest, interest rate swaps, cash taxes and other, and maintenance capital expenditures. We define gross operating margin, as revenues less cost of sales. The General Partner's cash available for distribution is defined as net income (loss) of the General Partner less the net income (loss) of the Partnership, which is consolidated into the General Partner's net income (loss), plus the General Partner's share of distributions from the Partnership, the General Partner's share of EnLink Oklahoma Gas Processing, LP (together with its subsidiaries, "EnLink Oklahoma T.O.") depreciation expense, the General Partner's deferred income tax expense, the General Partner's interest in the adjusted EBITDA of Midstream Holdings prior to the EMH drop downs, the General Partner's corporate goodwill impairment and the General Partner's acquisition transaction costs attributable to its share of the EnLink Oklahoma T.O. acquisition, and less the General Partner's interest in maintenance capital expenditures of Midstream Holdings prior to the EMH drop downs. Growth capital expenditures generally include capital expenditures made for acquisitions or capital improvements that we expect will increase our asset base, operating income or operating capacity over the long-term. Adjusted EBITDA of Midstream Holdings is defined as Midstream Holdings' net income plus taxes, depreciation and amortization, and distributions from unconsolidated affiliate investments less income from unconsolidated affiliate investments. EnLink Oklahoma T.O.'s adjusted EBITDA means EnLink Oklahoma T.O.'s net income plus depreciation and amortization
The Partnership's coverage ratio is calculated by dividing distributable cash flow by distributions paid to the General Partner and the unitholders. The General Partner's coverage ratio is calculated by dividing cash available for distribution by distributions paid by the General Partner. Growth capital expenditures generally include capital expenditures made for acquisitions or capital improvements that we expect will increase our asset base, operating income or operating capacity over the long-term. Maintenance capital expenditures are capital expenditures made to replace partially or fully depreciated assets in order to maintain the existing operating capacity of the assets and to extend their useful lives.
The Partnership and General Partner believe these measures are useful to investors because they may provide users of this financial information with meaningful comparisons between current results and prior-reported results, and a meaningful measure of the Partnership's and the General Partner's cash flow after it has satisfied the capital and related requirements of its operations. In addition, adjusted EBITDA achievement is a primary metric used in the Partnership's credit facility and short-term incentive program for compensating its employees.
Gross operating margin, adjusted EBITDA, distributable cash flow, and cash available for distribution, as defined above, are not measures of financial performance or liquidity under GAAP. They should not be considered in isolation or as an indicator of the Partnership's and the General Partner's performance. Furthermore, they should not be seen as a substitute for metrics prepared in accordance with GAAP. Reconciliations of these measures to their most directly comparable GAAP measures are included in the following tables. See ENLK's and ENLC's filings with the SEC for more information.
Forward-Looking Statements
This press release contains forward-looking statements within the meaning of the federal securities laws. Although these statements reflect the current views, assumptions and expectations of our management, the matters addressed herein involve certain assumptions, risks and uncertainties that could cause actual activities, performance, outcomes and results to differ materially from those indicated. Such forward-looking statements include, but are not limited to, statements about guidance, projected or forecasted financial and operating results, projections regarding distributions and coverage ratio, projections regarding income taxes, operational results of our customers, results in certain basins, future rig count and volume information, objectives, project timing, expectations and intentions and other statements that are not historical facts. Factors that could result in such differences or otherwise materially affect our financial condition, results of operations and cash flows include, without limitation,(a) the dependence on Devon for a substantial portion of the natural gas that we gather, process and transport, (b) developments that materially and adversely affect Devon or our other customers, (c) adverse developments in the midstream business may reduce our ability to make distributions, (d) our vulnerability to having a significant portion of our operations concentrated in the Barnett Shale, (e) the amount of hydrocarbons transported in our gathering and transmission lines and the level of our processing and fractionation operations, (f) impairments to goodwill, long-lived assets and equity method investments, (g) our ability to balance our purchases and sales, (h) fluctuations in oil, natural gas and NGL prices, (i) construction risks in our major development projects, (j) reductions in our credit ratings, (k) our debt levels and restrictions contained in our debt documents, (l) our ability to consummate future acquisitions, successfully integrate any acquired businesses, realize any cost savings and other synergies from any acquisition, (m) changes in the availability and cost of capital, (n) competitive conditions in our industry and their impact on our ability to connect hydrocarbon supplies to our assets, (o) operating hazards, natural disasters, weather-related delays, casualty losses and other matters beyond our control, (p) a failure in our computing systems or a cyber-attack on our systems, and (q) the effects of existing and future laws and governmental regulations, including environmental and climate change requirements and other uncertainties. These and other applicable uncertainties, factors and risks are described more fully in EnLink Midstream Partners, LP's and EnLink Midstream, LLC's filings with the Securities and Exchange Commission, including EnLink Midstream Partners, LP's and EnLink Midstream, LLC's Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K. Neither EnLink Midstream Partners, LP nor EnLink Midstream, LLC assumes any obligation to update any forward-looking statements.
The assumptions and estimates underlying the forecasted financial information included in the guidance information in this press release are inherently uncertain and, though considered reasonable by the EnLink Midstream management team as of the date of its preparation, are subject to a wide variety of significant business, economic, and competitive risks and uncertainties that could cause actual results to differ materially from those contained in the forecasted financial information. Accordingly, there can be no assurance that the forecasted results are indicative of EnLink Midstream's future performance or that actual results will not differ materially from those presented in the forecasted financial information. Inclusion of the forecasted financial information in this press release should not be regarded as a representation by any person that the results contained in the forecasted financial information will be achieved.
Investor Contact: Kate Walsh, Vice President of Investor Relations, 214-721-9696, kate.walsh@enlink.com
Media Contact: Jill McMillan, Vice President of Public & Industry Affairs, 214-721-9271, jill.mcmillan@enlink.com
EnLink Midstream Partners, LP
Forward-Looking Reconciliation of Net Income to Adjusted EBITDA to Distributable Cash Flow (1)
(All amounts in millions)
2017 Outlook
------------
Low Mid-point High
--- --------- ----
Net income (2) $80 $100 $120
Interest expense 176 176 176
Depreciation and amortization 570 580 590
(Income) loss from
unconsolidated affiliate
investments (7) (9) (11)
Distribution from
unconsolidated affiliate
investments 5 10 15
Unit-based compensation 40 43 46
Income taxes 5 5 5
Payments under onerous
performance obligation offset
to other current and long-
term liabilities (18) (18) (18)
Other (3) 4 4 4
--- --- ---
Adjusted EBITDA before non-
controlling interest $855 $891 $927
---- ---- ----
Non-controlling interest
share of adjusted EBITDA (4) (40) (41) (42)
Adjusted EBITDA, net to EnLink
Midstream Partners, LP $815 $850 $885
---- ---- ----
Interest expense (176) (176) (176)
Amortization of Tall Oak
installment payable discount
included in interest expense
(5) 26 26 26
Convertible Preferred
Distribution (32) (32) (32)
Cash taxes and other (5) (5) (5)
Maintenance capital
expenditures (38) (44) (48)
Distributable cash flow $590 $620 $650
==== ==== ====
(1) The projected
net income
guidance for
the year
ended
December 31,
2017 excludes
the potential
impact of
gains or
losses on
derivative
activity,
gains or
losses on
disposition
of assets,
impairment
expense,
gains or
losses as a
result of
legal
settlements,
gains or
losses on
extinguishment
of debt, and
the financial
effects of
future
acquisitions.
The exclusion
of these
items is due
to the
uncertainty
regarding the
occurrence,
timing and/
or amount of
these events.
(2) Net income
includes
estimated net
income
attributable
to ENLK's
non-
controlling
interest in
ENLC's 16%
share of net
income from
EnLink
Oklahoma
T.O., NGP's
49.9% share
of net income
from the
Delaware
Basin JV and
Marathon's
50% share of
net income
from the
Ascension JV.
(3) Includes
estimated
accretion
expense
associated
with asset
retirement
obligations
and estimated
non-cash
rent which
relates to
lease
incentives
pro-rated
over the
lease term.
(4) Non-
controlling
interest
share of
adjusted
EBITDA
includes
estimates for
ENLC's 16%
share of
adjusted
EBITDA from
EnLink
Oklahoma
T.O., NGP's
49.9% share
of adjusted
EBITDA from
the Delaware
Basin JV and
Marathon's
50% share of
adjusted
EBITDA from
the Ascension
JV.
(5) Amortization
of the Tall
Oak
installment
payable
discount is
considered
non-cash
interest
under our
credit
facility
since the
payment under
the payable
is
consideration
for the
acquisition
of the Tall
Oak assets.
EnLink Midstream does not provide a reconciliation of
forward-looking Adjusted EBITDA to Net Cash Provided by
Operating Activities because the companies are unable to
predict with reasonable certainty changes in working
capital, which may impact cash provided or used during
the year. Working capital includes accounts receivable,
accounts payable and other current assets and
liabilities. These items are uncertain and depend on
various factors outside the companies' control.
EnLink Midstream, LLC
Forward-Looking Reconciliation of Net Income of ENLC to ENLC Cash Available for Distribution (1)
(All amounts in millions)
2017 Outlook
------------
Low Mid-point High
--- --------- ----
Net income of ENLC (2) $45 $75 $105
Less: Net income
attributable to ENLK 57 85 113
--- --- ---
Net loss of ENLC excluding
ENLK ($12) ($10) ($8)
ENLC's share of
distributions from ENLK
(3) 199 199 199
ENLC's interest in EnLink
Oklahoma T.O.
depreciation 16 17 18
ENLC deferred income tax
expense (4) 12 14 16
Maintenance capital
expenditures (5) - - -
ENLC cash available for
distribution $215 $220 $225
==== ==== ====
(1) The projected
net income
guidance for
the year
ended
December 31,
2017 excludes
the potential
impact of
gains or
losses on
derivative
activity,
gains or
losses on
disposition
of assets,
impairment
expense,
gains or
losses as a
result of
legal
settlements,
gains or
losses on
extinguishment
of debt, and
the financial
effects of
future
acquisitions.
The exclusion
of these
items is due
to the
uncertainty
regarding the
occurrence,
timing and/
or amount of
these events.
Net income of
ENLC includes
estimated net
income
attributable
to ENLC's
non-
controlling
interest in
(2) ENLK.
Represents
quarterly
distributions
estimated to
be paid to
ENLC by ENLK
(3) during 2017.
Represents
ENLC's
estimated
stand-alone
deferred
(4) taxes.
(5) Maintenance
capital
expenditures
attributable
to ENLC's
share of
EnLink
Oklahoma T.O.
are projected
to be
immaterial
during 2017.
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SOURCE EnLink Midstream
