EnLink Midstream Reports Fourth Quarter and Full-Year 2016 Results

The EnLink Midstream companies (EnLink), EnLink Midstream Partners, LP (NYSE: ENLK) (the Partnership or ENLK) and EnLink Midstream, LLC (NYSE: ENLC) (the General Partner or ENLC), recently stated financial results for the fourth quarter and full-year 2016, reaffirmed guidance outlook for full-year 2017, and offered an operational update.

Highlights:

  • ENLK stated a net loss of about $565 million for the year ended December 31, 2016. ENLK achieved about $775 million of adjusted EBITDA net to ENLK for the same period, surpassing guidance for the year. Adjusted EBITDA is a non-GAAP measure and is explained in greater detail under “Non-GAAP Financial Information.”
  • ENLC stated a net loss of $460 million for the year ended December 31, 2016. ENLC achieved about $202 million of cash available for distribution for the same period, which was in-line with guidance. Cash available for distribution is a non-GAAP measure and is explained in greater detail under “Non-GAAP Financial Information.”
  • EnLink declared commercial success in the prolific Delaware Basin with the addition of a long-term, fee-based contract with a large, investment-grade producer who is very active in the region. Related to this new business, EnLink declared the acceleration of the Lobo II processing facility expansion, from its current 60 million cubic feet per day (MMcf/d) capacity to 120 MMcf/d of capacity, which is expected to be operational during the second quarter of 2017. The volume commitments associated with the new contract are expected to utilize the majority of the expanded capacity.
  • EnLink also recently declared gas gathering and processing commercial successes in the STACK with the signing of a contract with Newfield Exploration Co. and the formation of a joint venture with Kinder Morgan Inc. EnLink continues to expand and deepen key relationships in the STACK.

“In 2016, we performed well and are proud of the accomplishments achieved during a volatile and challenging commodity environment,” said Barry E. Davis, Chairman and Chief Executive Officer of EnLink. “The team focused on executing our planned growth plan and we are stronger recently because of the progress made this year. We delivered on financial and operational priorities, and exited the year on track.

“We are seeing favorable developments on our asset footprint, as producers increase investments, accelerate drilling programs and experience higher well productivity. We expect the momentum of producer activity to continue throughout 2017, and our current plan remains to exit the year with an annual adjusted EBITDA run-rate net to ENLK between $925 million and $950 million, which represents about 20 percent growth contrast to 2016’s adjusted EBITDA.”

EnLink Midstream Partners, LP: Fourth Quarter and Full-Year 2016 Financial Results

  • The Partnership stated a net loss attributable to ENLK of $29 million for the fourth quarter of 2016, and $565 million for the full-year 2016. The full-year 2016 net loss was mainly because of a non-cash expense of $566 million related to impairments. Comparatively, the Partnership stated a net loss of $714 million for the fourth quarter of 2015, and a net loss of $1.4 billion for full-year 2015. The full-year 2015 net losses were again mainly because of non-cash expenses related to impairments.
  • The Partnership achieved $195 million of adjusted EBITDA net to ENLK for the fourth quarter of 2016 and $775 million for the full-year 2016. Adjusted EBITDA net to ENLK was $186 million for the fourth quarter of 2015, and $678 million for the full-year 2015.
  • The Partnership achieved net cash offered by operating activities of $153 million for the fourth quarter of 2016, and $663 million for the full-year 2016. Comparatively, net cash offered by operating activities of $138 million was stated for the fourth quarter of 2015, with full year 2015 results being $646 million.
  • Distributable cash flow attributable to ENLK was $146 million for the fourth quarter of 2016 and $607 million for the full-year 2016. Comparatively, distributable cash flow was $149 million for the fourth quarter of 2015, and $529 million for the full-year 2015. Distributable cash flow is a non-GAAP measure and is explained in greater detail under “Non-GAAP Financial Information.”
  • Growth capital expenditures net to ENLK for full-year 2016 were $465 million, slightly above the midpoint of the guidance range of $425 million to $490 million. ENLK 2017 growth capital expenditures guidance net to ENLK is still expected to be in the range of $505 million to $645 million.

EnLink Midstream, LLC: Fourth Quarter and Full-Year 2016 Financial Results

  • The General Partner stated a net loss attributable to ENLC of $4 million for the fourth quarter of 2016 and a 2016 full-year net loss of $460 million. Comparatively, ENLC stated a net loss of $195 million in the fourth quarter of 2015, and a net loss of $355 million for full-year 2015. As formerly mentioned, the net losses are mainly because of non-cash expenses related to impairments.
  • The General Partner’s cash available for distribution was $52 million for the fourth quarter of 2016, and $202 million for the full year 2016. Comparatively, cash available for distribution was $48 million in the fourth quarter of 2015, and $199 million for the full-year 2015.

ENLK 2017 Full-Year Guidance Reaffirmed

  • Full-year 2017 net income midpoint for ENLK is projected to be $100 million and adjusted EBITDA midpoint net to ENLK is projected to be $850 million. Year-over-year growth in excess of 10 percent is forecasted related to annual adjusted EBITDA midpoint guidance from 2016 to 2017. EnLink’s 2017 guidance reflects a reduction to adjusted EBITDA related to declared non-core asset sales.
  • Distributable cash flow for 2017 is projected to range from $590 million to $650 million, and ENLK is projected to exit 2017 with a distribution coverage ratio in excess of 1.0, assuming flat distributions throughout 2017. EnLink anticipates to continue to build excess coverage during 2017, supporting the potential to resume distribution growth during 2018.
  • ENLK’s debt to adjusted EBITDA ratio for 2017 is projected to be in the range of 3.75 to 4.0, with no near-term debt maturities. EnLink is committed to maintaining a strong liquidity position with ample revolver capacity.
  • Growth capital expenditures funded solely by ENLK continue to be projected to range from $505 million to $645 million for 2017. A mid-single-digit adjusted EBITDA multiple is projected to be achieved from 2017 organic capital investments. Total growth capital expenditures are projected to range from $610 million to $770 million, counting contributions from joint venture partners and ENLC of about $105 million to $125 million. Growth capital expenditure ranges exclude the $250 million installment payment related to the acquisition in January 2016 which was paid in January 2017.
  • Proceeds from planned and accomplished 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 Reaffirmed

  • Full-year 2017 net income midpoint for ENLC is projected to be $75 million and cash available for distribution midpoint for ENLC is projected to be $220 million.
  • ENLC’s distribution coverage ratio for 2017 is projected to be in the range of 1.1 to 1.2. Flat distributions are expected throughout 2017, with the potential for distribution growth resumption as excess coverage reaches the high end of the projected range. Administration 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 is expected to range from $60 million to $70 million for 2017, with a mid-single-digit adjusted EBITDA multiple projected to be achieved from 2017 organic projects.
  • Cash income taxes are projected to be about $5 million per year for each of 2017, 2018 and 2019.

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