January 23, 2017 - 8:04 AM EST
Print Email Article Font Down Font Up Charts

EnLink Midstream Announces 2017 Guidance, Provides Operational Update

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 millionGrowth 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, [email protected]
Media Contact: Jill McMillan, Vice President of Public & Industry Affairs, 214-721-9271, [email protected]

 

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.



(2)

Net income of ENLC includes estimated net income attributable to ENLC's non-controlling interest in ENLK.



(3)

Represents quarterly distributions estimated to be paid to ENLC by ENLK during 2017.



(4)

Represents ENLC's estimated stand-alone deferred taxes.



(5)

Maintenance capital expenditures attributable to ENLC's share of EnLink Oklahoma T.O. are projected to be immaterial during 2017.

 

To view the original version on PR Newswire, visit:http://www.prnewswire.com/news-releases/enlink-midstream-announces-2017-guidance-provides-operational-update-300394544.html

SOURCE EnLink Midstream


Source: PR Newswire (January 23, 2017 - 8:04 AM EST)

News by QuoteMedia
www.quotemedia.com

Legal Notice