Enable Midstream Announces First Quarter 2019 Financial and Operating Results and Quarterly Distributions

  • Increased net income attributable to limited partners, Adjusted EBITDA
    and distributable cash flow (DCF) for first quarter 2019 compared to
    first quarter 2018
  • Increased natural gas gathered volumes, natural gas processed volumes,
    natural gas liquids (NGLs) production, crude oil and condensate
    gathered volumes, transported volumes and interstate firm contracted
    capacity for first quarter 2019 compared to first quarter 2018
  • Contracted or extended over 1,000,000 dekatherms per day (Dth/d) of
    transportation capacity during first quarter 2019
  • Declared a quarterly cash distribution of $0.318 per unit on all
    outstanding common units and $0.625 on all outstanding Series A
    Preferred Units

OKLAHOMA CITY–(BUSINESS WIRE)–Enable Midstream Partners, LP (NYSE: ENBL) today announced financial and
operating results for first quarter 2019.

Net income attributable to limited partners was $122 million for first
quarter 2019, an increase of $8 million compared to $114 million for
first quarter 2018. Net income attributable to common units was $113
million for first quarter 2019, an increase of $8 million compared to
$105 million for first quarter 2018. Net cash provided by operating
activities was $215 million for first quarter 2019, an increase of $49
million compared to $166 million for first quarter 2018. Adjusted EBITDA
was $297 million for first quarter 2019, an increase of $40 million
compared to $257 million for first quarter 2018. DCF was $208 million
for first quarter 2019, an increase of $12 million compared to $196
million for first quarter 2018.

For first quarter 2019, DCF exceeded declared distributions to common
unitholders by $70 million, resulting in a distribution coverage ratio
of 1.51x.

For additional information regarding the non-GAAP financial measures
Gross margin, Adjusted EBITDA and DCF, please see “Non-GAAP Financial
Measures.”

MANAGEMENT PERSPECTIVE

“Enable’s first quarter continues our track record of outstanding
financial performance driven by high-quality assets, operational
excellence and disciplined capital investment,” said Rod Sailor,
president and CEO. “As 2019 unfolds, we believe our focus on delivering
unique service offerings and results through safe and reliable
operations offers a compelling value to both customers and investors.”

BUSINESS HIGHLIGHTS

As of April 24, 2019, there were fifty-two rigs across Enable’s
footprint that were drilling wells expected to be connected to Enable’s
gathering systems. Forty-two of those rigs were in the Anadarko Basin,
eight were in the Ark-La-Tex Basin and two were in the Williston Basin.
Enable’s Anadarko Basin rig count is at its highest level since the
first quarter of 2015, and producers continue to achieve strong well
results in the basin. Enable’s recently acquired Anadarko Basin crude
and condensate midstream platform achieved gathered volumes of over 75
thousand barrels per day (MBbl/d) during first quarter 2019, and Enable
expects to gather crude or condensate from wells drilled by half of the
rigs currently active on Enable’s Anadarko footprint.

During first quarter 2019, Enable contracted or extended over 1,000,000
Dth/d of transportation capacity. On the Enable Mississippi River
Transmission, LLC (MRT) system, MRT extended transportation capacity
with its largest customer, St. Louis-based Spire Inc.

With a Federal Energy Regulatory Commission (FERC) order issued March 8,
2019, all FERC Form 501-G proceedings for Enable Gas Transmission, LLC
(EGT) have been concluded, and EGT’s existing rates remain in effect,
unchanged. Form 501-G is a one-time report required by the commission in
response to the reduction in the corporate income tax rate and the
commission’s Revised Policy Statement on Master Limited Partnerships.

The rate case originally filed by MRT June 29, 2018, continues to
advance at FERC. As of Jan. 1, 2019, MRT’s proposed rate increase is
being billed to customers. This proposed rate increase does not increase
current earnings because the rates are subject to refund, depending upon
the outcome of the case. MRT remains focused on ensuring that the
pipeline’s rates appropriately reflect historical investments and
current costs.

On April 12, 2019, Enable received approval for the request made by
Enable Gulf Run and EGT to initiate FERC’s pre-filing process for the
Gulf Run Project, an important milestone in the commission’s review of
the project. Enable continues to pursue opportunities to increase the
size of the project and expects to file a formal certificate application
with the commission upon the completion of the pre-filing process.

QUARTERLY DISTRIBUTIONS

On April 29, 2019, the board of directors of Enable’s general partner
declared a quarterly cash distribution of $0.318 per unit on all
outstanding common units for the quarter ended March 31, 2019. The
distribution is unchanged from the previous quarter. The quarterly cash
distribution of $0.318 per unit on all outstanding common units will be
paid May 29, 2019, to unitholders of record at the close of business May
21, 2019.

The board also declared a quarterly cash distribution of $0.625 per unit
on all outstanding Series A Preferred Units for the quarter ended March
31, 2019. The quarterly cash distribution of $0.625 per unit on all
outstanding Series A Preferred Units outstanding will be paid May 15,
2019, to unitholders of record at the close of business April 29, 2019.

KEY OPERATING STATISTICS

Natural gas gathered volumes were 4.54 trillion British thermal units
per day (TBtu/d) for first quarter 2019, an increase of 6 percent
compared to 4.28 TBtu/d for first quarter 2018. The increase was
primarily due to higher gathered volumes in the Anadarko Basin.

Natural gas processed volumes were 2.54 TBtu/d for first quarter 2019,
an increase of 14 percent compared to 2.22 TBtu/d for first quarter
2018. The increase was primarily due to higher processed volumes in the
Anadarko Basin.

NGLs produced were 138.19 MBbl/d for first quarter 2019, an increase of
25 percent compared to 110.29 MBbl/d for first quarter 2018. The
increase was primarily due to higher natural gas processed volumes and
increased recoveries of ethane.

Crude oil and condensate gathered volumes were 107.90 MBbl/d for first
quarter 2019, an increase of 83.07 MBbl/d compared to first quarter
2018. The increase over first quarter 2018 was primarily due to the
recent acquisition of Enable Oklahoma Crude Services, LLC’s (EOCS) crude
oil and condensate gathering system in the Anadarko Basin.

Interstate transportation firm contracted capacity was 6.52 billion
cubic feet per day (Bcf/d) for first quarter 2019, an increase of 8
percent compared to 6.05 Bcf/d for first quarter 2018. The increase was
primarily due to new contracted capacity on EGT, including volumes from
EGT’s CaSE project.

Intrastate transportation average deliveries were 2.32 TBtu/d for first
quarter 2019, an increase of 10 percent compared to 2.10 TBtu/d for
first quarter 2018. The increase was primarily related to increased
gathered volumes in the Anadarko Basin.

FIRST QUARTER FINANCIAL PERFORMANCE

Revenues were $795 million for first quarter 2019, an increase of $47
million compared to $748 million for first quarter 2018. Revenues are
net of $151 million of intercompany eliminations for first quarter 2019
and $122 million of intercompany eliminations for first quarter 2018.

Gathering and processing segment revenues were $630 million for first
quarter 2019, an increase of $39 million compared to $591 million for
first quarter 2018. The increase in gathering and processing segment
revenues was primarily due to:

  • an increase in revenues from natural gas sales due to higher sales
    volumes and higher average natural gas sales prices,
  • an increase in natural gas gathering revenues due to higher fees and
    gathered volumes in the Anadarko Basin,
  • an increase in crude oil, condensate and produced water gathering
    revenues primarily due to an increase related to the November 2018
    acquisition of EOCS and
  • an increase in processing service revenues resulting from higher
    processed volumes primarily under fixed processing arrangements,
    partially offset by lower consideration received from
    percent-of-proceeds, percent-of-liquids and keep-whole processing
    arrangements due to a decrease in the average realized price.

These increases were partially offset by:

  • a decrease in revenues from changes in the fair value of natural gas,
    condensate and NGL derivatives and
  • a decrease in revenues from NGL sales primarily due to a decrease in
    the average realized sales price from lower average market prices for
    all NGL products other than ethane and higher volumes subject to fee
    deductions for NGLs sold under certain third-party processing
    arrangements, partially offset by higher processed volumes and higher
    recoveries of ethane in the Anadarko and Ark-La-Tex Basins, which were
    sold at higher average ethane prices.

Transportation and storage segment revenues were $316 million for first
quarter 2019, an increase of $37 million compared to $279 million for
first quarter 2018. The increase in transportation and storage segment
revenues was primarily due to:

  • an increase in revenues from natural gas sales primarily due to higher
    sales volumes,
  • an increase in revenues from firm transportation and storage services
    due to new intrastate and interstate transportation contracts and
  • an increase related to changes in the fair value of natural gas
    derivatives.

These increases were partially offset by:

  • a decrease in volume-dependent transportation revenues primarily due
    to a decrease in commodity fees and interruptible fees related to
    power plant customers and
  • a decrease in revenues from NGL sales due to a decrease in lower
    average sales prices.

Gross margin was $417 million for first quarter 2019, an increase of $44
million compared to $373 million for first quarter 2018.

Gathering and processing segment gross margin was $270 million for first
quarter 2019, an increase of $37 million compared to $233 million for
first quarter 2018. The increase in gathering and processing segment
gross margin was primarily due to:

  • an increase in natural gas gathering fees due to higher fees and
    gathered volumes in the Anadarko Basin,
  • an increase in revenues from NGL sales less the cost of NGLs primarily
    driven by higher processed volumes and higher recoveries of ethane
    sold at higher prices, partially offset by lower average sales prices
    for all other NGL products,
  • an increase in crude oil, condensate and produced water gathering
    revenues primarily due to an increase related to the November 2018
    acquisition of EOCS,
  • an increase in processing service fees resulting from higher processed
    volumes primarily under fixed processing arrangements, partially
    offset by lower consideration received from percent-of-proceeds,
    percent-of-liquids and keep-whole processing arrangements due to a
    decrease in the average realized price and
  • an increase in revenues from natural gas sales less the cost of
    natural gas primarily due to higher sales volumes and higher average
    prices.

These increases were partially offset by:

  • a decrease in gross margin from changes in the fair value of natural
    gas, condensate and NGL derivatives.

Transportation and storage segment gross margin was $147 million for
first quarter 2019, an increase of $7 million compared to $140 million
for first quarter 2018. The increase in transportation and storage
segment gross margin was primarily due to:

  • an increase in firm transportation and storage services due to new
    intrastate and interstate transportation contracts and
  • an increase in the changes in the fair value of natural gas
    derivatives.

This increase was partially offset by:

  • a decrease in system management activities,
  • a decrease in NGL sales revenues less the cost of NGLs due to a
    decrease in average NGL prices, partially offset by higher volumes and
  • a decrease in volume-dependent transportation primarily due to a
    decrease in commodity fees and interruptible fees related to
    power-plant customers.

Operation and maintenance and general and administrative expenses were
$129 million for first quarter 2019, an increase of $8 million compared
to $121 million for first quarter 2018. The increase in operation and
maintenance and general and administrative expenses was primarily due to
an increase in expenses related to maintenance on treating plants as a
result of increased Ark-La-Tex Basin activity, an increase in compressor
rental expenses due to increased rental units, an increase in
payroll-related costs and an increase in utilities and outside services
costs as a result of additional assets in service.

Depreciation and amortization expense was $105 million for first quarter
2019, an increase of $9 million compared to $96 million for first
quarter 2018. The increase in depreciation and amortization expense was
primarily due to the amortization of customer intangibles acquired as
part of the acquisition of EOCS in the fourth quarter of 2018, other
additional assets placed in service and an increase in depreciation from
the implementation of new rates for gathering and processing assets from
a new depreciation study, partially offset by a decrease in depreciation
from the implementation of new intrastate natural gas pipeline rates
from a new depreciation study.

Taxes other than income tax was $18 million for first quarter 2019, an
increase of $1 million compared to $17 million for first quarter 2018.

Interest expense was $46 million for first quarter 2019, an increase of
$13 million compared to $33 million for first quarter 2018. The increase
was primarily due to an increase in the amount of and interest rates on
outstanding debt.

Enable uses derivatives to manage commodity price risk, and the gain or
loss associated with these derivatives is recognized in earnings.
Enable’s net income attributable to limited partners and net income
attributable to common units for first quarter 2019 includes a $10
million loss on derivative activity, compared to no net impact from
derivative activity for first quarter 2018, resulting in a decrease in
net income of $10 million. The decrease is the result of a decrease
related to the change in fair value of derivatives of $10 million.

Capital expenditures were $143 million for first quarter 2019, compared
to $190 million for first quarter 2018. Expansion capital expenditures
were $119 million for first quarter 2019, compared to $176 million for
first quarter 2018. Maintenance capital expenditures were $24 million
for first quarter 2019 and $14 million for first quarter 2018.

2019 OUTLOOK

Enable affirms the 2019 financial outlook, including expansion capital
outlook, presented in its third quarter 2018 financial results press
release dated Nov. 7, 2018.

EARNINGS CONFERENCE CALL AND WEBCAST

A conference call discussing first quarter results is scheduled today at
10 a.m. EDT (9 a.m. CDT). The toll-free dial-in number to access the
conference call is 833-535-2200, and the international dial-in number is
412-902-6730. The conference call ID is Enable Midstream Partners.
Investors may also listen to the call via Enable’s website at http://investors.enablemidstream.com.
Replays of the conference call will be available on Enable’s website.

AVAILABLE INFORMATION

Enable files annual, quarterly and other reports and other information
with the U.S. Securities and Exchange Commission (SEC). Enable’s SEC
filings are also available at the SEC’s website at http://www.sec.gov
which contains information regarding issuers that file electronically
with the SEC. Information about Enable may also be obtained at the
offices of the NYSE, 20 Broad Street, New York, New York 10005, or on
Enable’s website at https://www.enablemidstream.com.
On the investor relations tab of Enable’s website, https://investors.enablemidstream.com,
Enable makes available free of charge a variety of information to
investors. Enable’s goal is to maintain the investor relations tab of
its website as a portal through which investors can easily find or
navigate to pertinent information about Enable, including but not
limited to:

  • Enable’s annual reports on Form 10-K, quarterly reports on Form 10-Q,
    current reports on Form 8-K, and any amendments to those reports as
    soon as reasonably practicable after Enable electronically files that
    material with or furnishes it to the SEC;
  • press releases on quarterly distributions, quarterly earnings and
    other developments;
  • governance information, including Enable’s governance guidelines,
    committee charters and code of ethics and business conduct;
  • information on events and presentations, including an archive of
    available calls, webcasts and presentations;
  • news and other announcements that Enable may post from time to time
    that investors may find useful or interesting; and
  • opportunities to sign up for email alerts and RSS feeds to have
    information pushed in real time.

ABOUT ENABLE MIDSTREAM PARTNERS

Enable owns, operates and develops strategically located natural gas and
crude oil infrastructure assets. Enable’s assets include approximately
13,900 miles of natural gas, crude oil, condensate and produced water
gathering pipelines, approximately 2.6 Bcf/d of processing capacity,
approximately 7,800 miles of interstate pipelines (including Southeast
Supply Header, LLC of which Enable owns 50 percent), approximately 2,300
miles of intrastate pipelines and eight storage facilities comprising
84.5 billion cubic feet of storage capacity. For more information, visit http://www.enablemidstream.com.

This release is intended to be a qualified notice under Treasury
Regulation Section 1.1446-4(b). Brokers and nominees should treat one
hundred percent (100.0%) of Enable Midstream’s distributions to foreign
investors as being attributable to income that is effectively connected
with a United States trade or business. Accordingly, the partnership’s
distributions to foreign investors are subject to federal income tax
withholding at the highest applicable effective tax rate. Brokers and
nominees, and not the Partnership, are treated as the withholding agents
responsible for withholding on the distributions received by them on
behalf of foreign investors.

NON-GAAP FINANCIAL MEASURES

Enable has included the non-GAAP financial measures Gross margin,
Adjusted EBITDA, Adjusted interest expense, DCF and distribution
coverage ratio in this press release based on information in its
consolidated financial statements.

Gross margin, Adjusted EBITDA, Adjusted interest expense, DCF and
distribution coverage ratio are supplemental financial measures that
management and external users of Enable’s financial statements, such as
industry analysts, investors, lenders and rating agencies may use, to
assess:

  • Enable’s operating performance as compared to those of other publicly
    traded partnerships in the midstream energy industry, without regard
    to capital structure or historical cost basis;
  • The ability of Enable’s assets to generate sufficient cash flow to
    make distributions to its partners;
  • Enable’s ability to incur and service debt and fund capital
    expenditures; and
  • The viability of acquisitions and other capital expenditure projects
    and the returns on investment of various investment opportunities.

This press release includes a reconciliation of Gross margin to total
revenues, Adjusted EBITDA and DCF to net income attributable to limited
partners, Adjusted EBITDA to net cash provided by operating activities
and Adjusted interest expense to interest expense, the most directly
comparable GAAP financial measures as applicable, for each of the
periods indicated. Distribution coverage ratio is a financial
performance measure used by management to reflect the relationship
between Enable’s financial operating performance and cash distributions.
Enable believes that the presentation of Gross margin, Adjusted EBITDA,
Adjusted interest expense, DCF and distribution coverage ratio provides
information useful to investors in assessing its financial condition and
results of operations. Gross margin, Adjusted EBITDA, Adjusted interest
expense, DCF and distribution coverage ratio should not be considered as
alternatives to net income, operating income, total revenue, cash flow
from operating activities or any other measure of financial performance
or liquidity presented in accordance with GAAP. Gross margin, Adjusted
EBITDA, Adjusted interest expense, DCF and distribution coverage ratio
have important limitations as analytical tools because they exclude some
but not all items that affect the most directly comparable GAAP
measures. Additionally, because Gross margin, Adjusted EBITDA, Adjusted
interest expense, DCF and distribution coverage ratio may be defined
differently by other companies in Enable’s industry, its definitions of
these measures may not be comparable to similarly titled measures of
other companies, thereby diminishing their utility.

FORWARD-LOOKING STATEMENTS

Some of the information in this press release may contain
forward-looking statements. Forward-looking statements give our current
expectations, contain projections of results of operations or of
financial condition, or forecasts of future events. Words such as
“could,” “will,” “should,” “may,” “assume,” “forecast,” “position,”
“predict,” “strategy,” “expect,” “intend,” “plan,” “estimate,”
“anticipate,” “believe,” “project,” “budget,” “potential,” or
“continue,” and similar expressions are used to identify forward-looking
statements. Without limiting the generality of the foregoing,
forward-looking statements contained in this press release include our
expectations of plans, strategies, objectives, growth and anticipated
financial and operational performance, including revenue projections,
capital expenditures and tax position. Forward-looking statements can be
affected by assumptions used or by known or unknown risks or
uncertainties. Consequently, no forward-looking statements can be
guaranteed.

A forward-looking statement may include a statement of the assumptions
or bases underlying the forward-looking statement. We believe that we
have chosen these assumptions or bases in good faith and that they are
reasonable. However, when considering these forward-looking statements,
you should keep in mind the risk factors and other cautionary statements
in this press release and in our Annual Report on Form 10-K for the year
ended Dec. 31, 2018 (“Annual Report”). Those risk factors and other
factors noted throughout this press release and in our Annual Report
could cause our actual results to differ materially from those disclosed
in any forward-looking statement. You are cautioned not to place undue
reliance on any forward-looking statements.

Any forward-looking statements speak only as of the date on which such
statement is made and we undertake no obligation to correct or update
any forward-looking statement, whether as a result of new information or
otherwise, except as required by applicable law.

   

ENABLE MIDSTREAM PARTNERS, LP

CONSOLIDATED STATEMENTS OF INCOME

(Unaudited)

 
Three Months Ended March 31,
2019     2018
 
(In millions, except per unit data)
Revenues (including revenues from affiliates):
Product sales $ 443 $ 443
Service revenue 352   305  
Total Revenues 795   748  
Cost and Expenses (including expenses from affiliates):
Cost of natural gas and natural gas liquids (excluding depreciation
and amortization shown separately)
378 375
Operation and maintenance 103 94
General and administrative 26 27
Depreciation and amortization 105 96
Taxes other than income tax 18   17  
Total Cost and Expenses 630   609  
Operating Income 165   139  
Other Income (Expense):
Interest expense (46 ) (33 )
Equity in earnings of equity method affiliate 3 6
Other, net   2  
Total Other Expense (43 ) (25 )
Income Before Income Tax 122 114
Income tax benefit (1 )  
Net Income $ 123 $ 114
Less: Net income attributable to noncontrolling interest 1    
Net Income Attributable to Limited Partners $ 122 $ 114
Less: Series A Preferred Unit distributions 9   9  
Net Income Attributable to Common Units $ 113   $ 105  
 
Basic earnings per unit
Common units $ 0.26 $ 0.24
Diluted earnings per unit
Common units $ 0.26 $ 0.24
 

Contacts

Media
David Klaassen
(405) 553-6431

Investor
Matt Beasley
(405) 558-4600

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