EnLink Midstream Reports Second Quarter 2024 Results

DALLAS, Aug. 6, 2024 /PRNewswire/ -- EnLink Midstream, LLC (NYSE: ENLC) (EnLink) today reported financial results for the second quarter of 2024.

Highlights

• Reported net income of $67.0 million and net cash provided by operating activities of $162.6 million for the second quarter of 2024.
• Generated adjusted EBITDA, net to EnLink, of $306.0 million for the second quarter of 2024.
• Delivered $53.3 million of free cash flow after distributions (FCFAD) for the second quarter of 2024.
• Subsequent to the quarter, EnLink reached final investment decision (FID) for EnLink's first brownfield natural gas expansion project in Louisiana with plans to expand Jefferson Island Storage & Hub (JISH) by approximately 8 billion cubic feet (Bcf). The project received strong commercial interest and is backed by investment-grade credit customers under long-term contracts.
• Repurchased approximately $50.0 million[1] of common units in the second quarter of 2024. EnLink has repurchased approximately $100 million of common units through the first half of 2024.
• Subsequent to the quarter, the Board of Directors increased the 2024 common unit repurchase authorization by $50 million to $250 million. The increase reflected the generation of strong FCFAD, as well as the deferral of carbon capture and sequestration spending.
• Subsequent to the quarter, EnLink purchased $200 million of Series B preferred units. Combined with common unit exchanges initiated by the preferred unitholders, approximately $410 million of Series B preferred units now remain outstanding, reflecting a reduction of nearly 50% since the beginning of 2024.

"EnLink delivered a solid quarter in line with our expectations, as our midstream assets and our diversified business continue to show resilience," EnLink President and Chief Executive Officer Jesse Arenivas said. "Our Louisiana team is executing on a multiprong growth strategy and moving projects toward commercialization, such as the 'Henry Hub to the River' project announced last quarter and the JISH expansion announced today, to supply the high-demand market for natural gas. EnLink's strength is in our diverse, integrated value chain, which we continue to leverage for new opportunities that optimize and grow our business."

Adjusted EBITDA and FCFAD used in this press release are non-GAAP measures and are explained in greater detail under "Non-GAAP Financial Information" below.

Second Quarter 2024 Financial Results and Highlights

Second Quarter 2024 Segment Updates

Permian Basin:

• Segment profit for the second quarter of 2024 was $93.1 million, including operating expenses related to plant relocation of $16.8 million and unrealized derivative losses of $1.3 million. Excluding plant relocation operating expenses and unrealized derivative activity, segment profit in the second quarter of 2024 grew approximately 10% sequentially and grew approximately 10% over the second quarter of 2023.
• Average natural gas gathering volumes for the second quarter of 2024 were approximately 7% higher compared to the first quarter of 2024 and approximately 17% higher compared to the second quarter of 2023.
• Average natural gas processing volumes for the second quarter of 2024 were approximately 6% higher compared to the first quarter of 2024 and approximately 14% higher compared to the second quarter of 2023. EnLink continues to benefit from strong producer drilling and completion activity.
• Average crude gathering volumes for the second quarter of 2024 were approximately 16% higher compared to the first quarter of 2024 and approximately 23% higher compared to the second quarter of 2023.
• EnLink's third plant relocation, Tiger II, came online in May.

Louisiana:

• Segment profit for the second quarter of 2024 was $84.3 million, including unrealized derivative gains of $5.6 million. Excluding unrealized derivative activity, segment profit in the second quarter of 2024 decreased approximately 39% sequentially, driven by normal seasonal effects in the natural gas liquids (NGL) segment, and decreased 9% over the second quarter of 2023.
• Average natural gas transportation volumes for the second quarter of 2024 were approximately 2% higher compared to the first quarter of 2024 and approximately 20% higher compared to the second quarter of 2023.
• NGL fractionation volumes for the second quarter of 2024 were approximately 5% lower compared to the first quarter of 2024 and 2% lower compared to the second quarter of 2023.
• EnLink reached FID on the Stage 1 brownfield expansion project at JISH, adding approximately 8 Bcf of working gas storage. Consistent with EnLink's strategy to leverage existing assets, Stage 1 will cost approximately $85 million with project economics in the low-to-mid single digit EBITDA multiples. The Stage 1 expansion is anticipated to begin service in 2028 and will increase working gas storage to 10 Bcf from 2 Bcf at JISH.

Oklahoma:

• Segment profit for the second quarter of 2024 was $103.5 million, including operating expenses related to plant relocation of $0.1 million and unrealized derivative gains of $0.8 million. Excluding plant relocation operating expenses and unrealized derivative activity, segment profit in the second quarter of 2024 grew 14% sequentially but decreased approximately 5% over the second quarter of 2023.
• Average natural gas gathering volumes for the second quarter of 2024 were approximately 7% higher compared to the first quarter of 2024 but were approximately 3% lower compared to the second quarter of 2023.
• Average natural gas processing volumes for the second quarter of 2024 were approximately 8% higher compared to the first quarter of 2024 but were approximately 3% lower compared to the second quarter of 2023.
• Average crude gathering volumes during the second quarter of 2024 were approximately 13% lower compared to the first quarter of 2024 and approximately 34% lower compared to the second quarter of 2023.

North Texas:

• Segment profit for the second quarter of 2024 was $52.4 million, including unrealized derivative losses of $1.1 million. Excluding unrealized derivative activity, segment profit in the second quarter of 2024 decreased approximately 11% sequentially and decreased approximately 28% over the second quarter of 2023. Segment results during the second quarter of 2024 reflect a full-quarter impact from the previously disclosed one-time contract reset.
• Average natural gas gathering and transportation volumes for the second quarter of 2024 were approximately 2% higher compared to the first quarter of 2024 but were approximately 8% lower compared to the second quarter of 2023.
• Average natural gas processing volumes for the second quarter of 2024 were approximately 1% higher compared to the first quarter of 2024 but were approximately 8% lower compared to the second quarter of 2023.

Second Quarter 2024 Webcast Details

EnLink will host a webcast and conference call to discuss second quarter 2024 results on August 7, 2024, at 8 a.m. Central time. The conference call will be broadcast via an internet webcast, which can be accessed on the Investors page of EnLink's website at investors.enlink.com. Interested parties can access an archived replay of the webcast on EnLink's website for at least 90 days following the event.

About the EnLink Midstream Companies

Headquartered in Dallas, EnLink Midstream (NYSE: ENLC) provides integrated midstream infrastructure services for natural gas, crude oil, and NGLs, as well as CO₂ transportation for carbon capture and sequestration (CCS). Our large-scale, cash-flow-generating asset platforms are in premier production basins and core demand centers, including the Permian Basin, Louisiana, Oklahoma, and North Texas. EnLink is focused on maintaining the financial flexibility and operational excellence that enables us to strategically grow and create sustainable value. Visit www.EnLink.com to learn how EnLink connects energy to life.

Non-GAAP Financial Information

This press release contains non-generally accepted accounting principles financial measures that we refer to as adjusted EBITDA and free cash flow after distributions (FCFAD).

We define adjusted EBITDA as net income (loss) plus (less) interest expense, net of interest income; depreciation and amortization; impairments; (income) loss from unconsolidated affiliate investments; distributions from unconsolidated affiliate investments; (gain) loss on disposition of assets; (gain) loss on extinguishment of debt; (gain) loss on litigation settlement; unit-based compensation; income tax expense (benefit); unrealized (gain) loss on commodity derivatives; costs associated with the relocation of processing facilities; accretion expense associated with asset retirement obligations; transaction costs; non-cash expense related to changes in the fair value of contingent consideration; (non-cash rent); and (non-controlling interest share of adjusted EBITDA from joint ventures).

We define free cash flow after distributions as adjusted EBITDA, net to ENLC, plus (less) (growth and maintenance capital expenditures, excluding capital expenditures that were contributed by other entities and relate to the non-controlling interest share of our consolidated entities); (interest expense, net of interest income); (distributions declared on common units); (cash distributions earned by the Series B Preferred Units and the Series C Preferred Units); (payment to redeem mandatorily redeemable non-controlling interest); (earnout payments related to the Amarillo Rattler Acquisition and the Central Oklahoma Acquisition); (costs associated with the relocation of processing facilities, excluding costs that were contributed by other entities and relate to the non-controlling interest share of our consolidated entities); non-cash interest (income)/expense; (contributions to investment in unconsolidated affiliates); (payments to terminate interest rate swaps); (current income taxes); (non-cash gain associated with a lease modification); and proceeds from the sale of equipment and land.

EnLink believes these measures are useful to investors because they may provide users of this financial information with meaningful comparisons between current results and previously-reported results and a meaningful measure of the company's cash flow after it has satisfied the capital and related requirements of its operations. In addition, adjusted EBITDA is used as a metric in our short-term incentive program for compensating employees and in our performance awards for executives.

Adjusted EBITDA and free cash flow after distributions, 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 EnLink'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 EnLink's filings with the Securities and Exchange Commission for more information.

Other definitions and explanations of terms used in this press release:

Segment profit (loss) is defined as revenues, less cost of sales (exclusive of operating expenses and depreciation and amortization), less operating expenses. Segment profit (loss) includes non-cash compensation expenses reflected in operating expenses. See "Item 8. Financial Statements and Supplementary Data - Note 16 - Segment Information" in ENLC's Annual Report on Form 10-K for the year ended December 31, 2023, and, when available, "Item 1. Financial Statements - Note 11—Segment Information" in ENLC's Quarterly Report on Form 10-Q for the three months ended June 30, 2024, for further information about segment profit (loss).

The Ascension JV is a joint venture between a subsidiary of EnLink and a subsidiary of Marathon Petroleum Corporation in which EnLink owns a 50% interest and Marathon Petroleum Corporation owns a 50% interest. The Ascension JV, which began operations in April 2017, owns an NGL pipeline that connects EnLink's Riverside fractionator to Marathon Petroleum Corporation's Garyville refinery.

The Delaware Basin JV is a joint venture between EnLink and an affiliate of NGP Natural Resources XI, L.P. ("NGP") in which EnLink owns a 50.1% interest and NGP owns a 49.9% interest. The Delaware Basin JV, which was formed in August 2016, owns the Lobo processing facilities and the Tiger processing plant located in the Delaware Basin in Texas.

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 herein. Therefore, you should not rely on any of these forward-looking statements. All statements, other than statements of historical fact, included in this press release constitute forward-looking statements, including, but not limited to statements identified by the words "forecast," "may," "believe," "will," "shall," "should," "plan," "predict," "anticipate," "intend," "estimate," "expect," "continue," and similar expressions. Such forward-looking statements include, but are not limited to, statements about guidance, projected or forecasted financial and operating results, future results and growth of our CCS business, potential financial arrangements with CCS counterparties, acquisitions, or growth capital expenditures, timing for completion of construction or expansion projects, results in certain basins, cost savings or operational, environmental, and climate change initiatives, profitability, financial or leverage metrics, repurchases of common or preferred units, our future capital structure and credit ratings, objectives, strategies, 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, or cash flows include, without limitation (a)  potential conflicts of interest of Global Infrastructure Partners ("GIP") with us and the potential for GIP to compete with us or favor GIP's own interests to the detriment of our other unitholders, (b) adverse developments in the midstream business that may reduce our ability to make distributions, (c) competition for crude oil, condensate, natural gas, and NGL supplies and any decrease in the availability of such commodities, (d) decreases in the volumes that we gather, process, fractionate, or transport, (e) our ability or our customers' ability to receive or renew required government or third party permits and other approvals, (f) increased federal, state, and local legislation, and regulatory initiatives, as well as government reviews relating to hydraulic fracturing resulting in increased costs and reductions or delays in natural gas production by our customers, (g) climate change legislation and regulatory initiatives resulting in increased operating costs and reduced demand for the natural gas and NGL services we provide, (h) changes in the availability and cost of capital, (i) volatile prices and market demand for crude oil, condensate, natural gas, and NGLs that are beyond our control, (j) debt levels that could limit our flexibility and adversely affect our financial health or limit our flexibility to obtain financing and to pursue other business opportunities, (k) operating hazards, natural disasters, weather-related issues or delays, casualty losses, and other matters beyond our control, (l) reductions in demand for NGL products by the petrochemical, refining, or other industries or by the fuel markets, (m) our dependence on significant customers for a substantial portion of the natural gas and crude that we gather, process, and transport, (n) construction risks in our major development projects, (o) challenges we may face in connection with our strategy to build a CCS transportation business and to enter into other new lines of business related to the energy transition, (p)our ability to effectively integrate and manage assets we acquire through acquisitions, (q) the impact of the coronavirus (COVID-19) pandemic (including the impact of any new variants of the virus) and similar pandemics, (r) impairments to goodwill, long-lived assets and equity method investments, and (s) the effects of existing and future laws and governmental regulations, and other uncertainties. These and other applicable uncertainties, factors, and risks are described more fully in EnLink Midstream, LLC's filings with the Securities and Exchange Commission, including EnLink Midstream, LLC's Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, and Current Reports on Form 8-K. EnLink assumes no obligation to update any forward-looking statements.

The EnLink management team based the forecasted financial information included herein on certain information and assumptions, including, among others, the producer budgets / forecasts to which EnLink has access as of the date of this press release and the projects / opportunities expected to require capital expenditures as of the date of this press release. The assumptions, information, 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 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'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 Relations: Brian Brungardt, Senior Director of Investor Relations, 214-721-9353, [email protected]
Media Relations: Megan Wright, Director of Corporate Communications, 214-721-9694, [email protected]

SOURCE EnLink Midstream, LLC