Enable Midstream Partners, LP (NYSE: ENBL) today announced
financial and operating results for third quarter 2021.
Net income attributable to limited partners was $116 million for
third quarter 2021, an increase of $280 million compared to $164
million of net loss for third quarter 2020. Net income attributable
to common units was $107 million for third quarter 2021, an
increase of $280 million compared to $173 million of net loss for
third quarter 2020. Enable’s third quarter 2020 results were
impacted by a $225 million non-cash other than temporary impairment
on its investment in Southeast Supply Header, LLC. Net cash
provided by operating activities was $265 million for third quarter
2021, an increase of $33 million compared to $232 million for third
quarter 2020. Adjusted EBITDA was $269 million for third quarter
2021, an increase of $40 million compared to $229 million for third
quarter 2020. Distributable cash flow (DCF) was $193 million for
third quarter 2021, an increase of $46 million compared to $147
million for third quarter 2020.
For third quarter 2021, DCF exceeded declared distributions to
common unitholders by $121 million, resulting in a distribution
coverage ratio of 2.68x.
For additional information regarding the non-GAAP financial
measures Gross margin, Adjusted EBITDA, DCF, Adjusted interest
expense and distribution coverage ratio, please see “Non-GAAP
Financial Measures.”
MANAGEMENT PERSPECTIVE
“Enable’s third quarter results demonstrate the partnership’s
operating leverage and position to capture the increasing activity
across our footprint driven by stronger energy market
fundamentals,” said Rod Sailor, president and CEO. “I am also
pleased to announce that we have received all necessary approvals
for our Gulf Run Pipeline project and plan to commence construction
on the project early next year.
“As the expected close date of the Enable and Energy Transfer
merger draws near, I want to thank everyone who has partnered with
us over the years, including our employees and their families, our
customers, our investors and all of the communities across our
footprint.”
BUSINESS HIGHLIGHTS
- Achieved higher net income attributable to limited partners,
Adjusted EBITDA and DCF for third quarter 2021 compared to third
quarter 2020, primarily as a result of higher commodity prices and
higher natural gas gathering and processing volumes as compared to
production curtailments experienced during the third quarter of
2020
- Fully funded the partnership’s capital program and
distributions for third quarter 2021 while reducing leverage, with
total debt to Adjusted EBITDA now at approximately 3.7x on a
trailing twelve-month basis
- 17 rigs were drilling wells across Enable’s footprint expected
to be connected to Enable’s gathering systems as of Oct. 25, 2021,
an increase of 7 rigs compared to July 28, 2021; 11 rigs are
currently operating in the Anadarko Basin, 5 rigs are currently
operating in the Ark-La-Tex Basin and 1 rig is currently operating
in the Arkoma Basin
- Continued to advance the Gulf Run Pipeline project
- Filed an Implementation Plan Aug. 24, 2021, in compliance with
the Federal Energy Regulatory Commission’s (FERC) June 1, 2021
order
- Received an individual, project-specific permit from the U.S.
Army Corps of Engineers
- Received a Notice to Proceed with Construction from FERC Oct.
19, 2021, granting approval to proceed with construction activities
for the project
- Selected a general contractor for construction of the
project
- Expect the project to be operational to serve customers by late
2022, with construction activities commencing in early 2022
- Expect the project to have an initial capacity of approximately
1.7 billion cubic feet per day (Bcf/d), with the ability to expand
to approximately 2.7 Bcf/d by adding additional compression
- Contracted or extended over 250,000 dekatherms per day (Dth/d)
of transportation capacity during third quarter 2021 on Enable Gas
Transmission, LLC (EGT), Enable Mississippi River Transmission, LLC
(MRT) and Enable Oklahoma Intrastate Transmission, LLC (EOIT)
- Received FERC approval for firm park and loan (PAL) service on
the EGT pipeline system, a service designed to provide firm
physical supply during periods of critical need such as February’s
winter storm event; currently working through contractual details
with shippers who bid for capacity during a recent open season
ENERGY TRANSFER TRANSACTION
UPDATE
Enable and Energy Transfer LP (NYSE: ET) continue to work with
the Federal Trade Commission regarding the agency’s review under
the Hart-Scott-Rodino Act of the proposed merger transaction.
Enable expects the transaction will close by year-end 2021.
QUARTERLY DISTRIBUTIONS
As previously announced, on Oct. 26, 2021, the board of
directors of Enable’s general partner declared a quarterly cash
distribution of $0.16525 per unit on all outstanding common units
for the quarter ended Sept. 30, 2021. The distribution is unchanged
from the previous quarter and represents Enable’s 30th consecutive
quarterly distribution since the partnership’s initial public
offering in April 2014. The quarterly cash distribution of $0.16525
per unit on all outstanding common units will be paid Nov. 17,
2021, to unitholders of record at the close of business Nov. 8,
2021.
As also previously announced, the board declared a quarterly
cash distribution of $0.5403 per unit on all outstanding Series A
Preferred Units for the quarter ended Sept. 30, 2021. The quarterly
cash distribution of $0.5403 per unit on all outstanding Series A
Preferred Units will be paid Nov. 12, 2021, to unitholders of
record at the close of business Oct. 26, 2021.
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
https://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://enablemidstream.com. On the Investor Relations section 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
section 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 14,000 miles of natural gas, crude oil, condensate
and produced water gathering pipelines, approximately 2.6 Bcf/d of
natural gas processing capacity, approximately 7,800 miles of
interstate pipelines (including Southeast Supply Header, LLC of
which Enable owns 50%), approximately 2,200 miles of intrastate
pipelines and seven natural gas storage facilities comprising 84.5
billion cubic feet of storage capacity. For more information, visit
https://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%) of Enable’s distributions to foreign
investors as being attributable to income that is effectively
connected with a United States trade or business. Accordingly,
Enable’s distributions to foreign investors are subject to federal
income tax withholding at the highest applicable effective tax
rate. Brokers and nominees, and not Enable, 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, DCF, Adjusted interest expense and
distribution coverage ratio in this press release based on
information in its consolidated financial statements.
Gross margin, Adjusted EBITDA, DCF, Adjusted interest expense
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, DCF, Adjusted
interest expense and distribution coverage ratio provides
information useful to investors in assessing its financial
condition and results of operations. Gross margin, Adjusted EBITDA,
DCF, Adjusted interest expense 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, DCF, Adjusted
interest expense 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, DCF, Adjusted
interest expense 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 and 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 statements pertaining to our pending
merger with Energy Transfer LP and our expectations of plans,
strategies, objectives, growth and anticipated financial and
operational performance, as updated by this press release. In
particular, our statements with respect to continuity plans and
preparedness measures we have implemented in response to the novel
coronavirus (COVID-19) pandemic and its expected impact on our
business, operations, earnings and results are forward-looking
statements. 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
our Annual Report on Form 10-K for the year ended Dec. 31, 2020
(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
September 30,
Nine Months Ended
September 30,
2021
2020
2021
2020
(In millions, except per unit
data)
Revenues (including revenues from
affiliates):
Product sales
$
623
$
280
$
1,710
$
764
Service revenues
333
316
1,003
995
Total Revenues
956
596
2,713
1,759
Cost and Expenses (including expenses
from affiliates):
Cost of natural gas and natural gas
liquids (excluding depreciation and amortization shown
separately)
565
250
1,510
653
Operation and maintenance
92
96
267
313
General and administrative
27
28
89
73
Depreciation and amortization
104
105
313
314
Impairments of property, plant and
equipment and goodwill
—
—
—
28
Taxes other than income tax
16
17
52
52
Total Cost and Expenses
804
496
2,231
1,433
Operating Income
152
100
482
326
Other Income (Expense):
Interest expense
(41
)
(43
)
(125
)
(136
)
Equity in earnings (losses) of equity
method affiliate, net
4
(222
)
5
(211
)
Other, net
1
2
7
7
Total Other Expense
(36
)
(263
)
(113
)
(340
)
Income (Loss) Before Income Tax
116
(163
)
369
(14
)
Net Income (Loss)
$
116
$
(163
)
$
369
$
(14
)
Less: Net income (loss) attributable to
noncontrolling interest
—
1
2
(6
)
Net Income (Loss) Attributable to
Limited Partners
$
116
$
(164
)
$
367
$
(8
)
Less: Series A Preferred Unit
distributions
9
9
26
27
Net Income (Loss) Attributable to
Common Units
$
107
$
(173
)
$
341
$
(35
)
Basic and diluted earnings (loss) per
unit
Basic
$
0.24
$
(0.40
)
$
0.78
$
(0.08
)
Diluted
$
0.24
$
(0.40
)
$
0.76
$
(0.08
)
ENABLE MIDSTREAM PARTNERS,
LP
RECONCILIATION OF NON-GAAP
FINANCIAL MEASURES
Three Months Ended
September 30,
Nine Months Ended
September 30,
2021
2020
2021
2020
(In millions)
Reconciliation of Gross margin to Total
Revenues:
Consolidated
Product sales
$
623
$
280
$
1,710
$
764
Service revenues
333
316
1,003
995
Total Revenues
956
596
2,713
1,759
Cost of natural gas and natural gas
liquids (excluding depreciation and amortization)
565
250
1,510
653
Gross margin
$
391
$
346
$
1,203
$
1,106
Reportable Segments
Gathering and Processing
Product sales
$
625
$
271
$
1,514
$
739
Service revenues
214
192
622
592
Total Revenues
839
463
2,136
1,331
Cost of natural gas and natural gas
liquids (excluding depreciation and amortization)
571
244
1,406
631
Gross margin
$
268
$
219
$
730
$
700
Transportation and Storage
Product sales
$
157
$
79
$
624
$
213
Service revenues
122
126
390
409
Total Revenues
279
205
1,014
622
Cost of natural gas and natural gas
liquids (excluding depreciation and amortization)
154
78
539
215
Gross margin
$
125
$
127
$
475
$
407
Three Months Ended
September 30,
Nine Months Ended
September 30,
2021
2020
2021
2020
(In millions, except
Distribution coverage ratio)
Reconciliation of Adjusted EBITDA and
DCF to net income attributable to limited partners and calculation
of Distribution coverage ratio:
Net income (loss) attributable to limited
partners
$
116
$
(164
)
$
367
$
(8
)
Depreciation and amortization expense
104
105
313
314
Interest expense, net of interest
income
40
43
124
135
Distributions received from equity method
affiliate in excess of equity earnings
(3
)
1
—
9
Impairment of equity method affiliate
investment
—
225
—
225
Non-cash equity-based compensation
4
3
12
10
Change in fair value of derivatives
(1)
7
15
36
17
Equity AFUDC and other non-cash items
(2)
1
1
(4
)
23
Impairments of property, plant and
equipment and goodwill
—
—
—
28
Gain on extinguishment of debt
—
—
—
(5
)
Noncontrolling Interest Share of Adjusted
EBITDA
—
—
—
(9
)
Adjusted EBITDA
$
269
$
229
$
848
$
739
Series A Preferred Unit distributions
(3)
(9
)
(9
)
(26
)
(27
)
Distributions for phantom and performance
units (4)
(1
)
—
(1
)
(1
)
Adjusted interest expense (5)
(39
)
(42
)
(122
)
(134
)
Maintenance capital expenditures
(27
)
(31
)
(61
)
(69
)
Current income taxes
—
—
—
1
DCF
$
193
$
147
$
638
$
509
Distributions related to common
unitholders (6)
$
72
$
72
$
216
$
216
Distribution coverage ratio (7)
2.68
2.04
2.95
2.36
___________________
(1)
Change in fair value of derivatives
includes changes in the fair value of derivatives that are not
designated as hedging instruments.
(2)
Other non-cash items includes write-downs
and gains and loss on sale and retirement of assets.
(3)
This amount represents the quarterly cash
distributions on the Series A Preferred Units declared for the
three months ended September 30, 2021 and 2020. In accordance with
the Partnership Agreement, the Series A Preferred Unit
distributions are deemed to have been paid out of available cash
with respect to the quarter immediately preceding the quarter in
which the distribution is made.
(4)
Distributions for phantom and performance
units represent distribution equivalent rights paid in cash.
Phantom unit distribution equivalent rights are paid during the
vesting period and performance unit distribution equivalent rights
are paid at vesting.
(5)
See below for a reconciliation of Adjusted
interest expense to Interest expense.
(6)
Represents cash distributions declared for
common units outstanding as of each respective period. Amounts for
2021 reflect estimated cash distributions for common units
outstanding for the quarter ended September 30, 2021.
(7)
Distribution coverage ratio is computed by
dividing DCF by Distributions related to common unitholders.
Three Months Ended
September 30,
Nine Months Ended
September 30,
2021
2020
2021
2020
(In millions)
Reconciliation of Adjusted EBITDA to
net cash provided by operating activities:
Net cash provided by operating
activities
$
265
$
232
$
678
$
543
Interest expense, net of interest
income
40
43
124
135
Noncontrolling interest share of cash
provided by operating activities
—
(1
)
(3
)
(3
)
Current income taxes
—
—
—
1
Equity AFUDC and other non-cash items
(1)
—
(2
)
(1
)
—
Proceeds from insurance
—
1
—
1
Changes in operating working capital which
(provided) used cash:
Accounts receivable
55
3
130
(27
)
Accounts payable
(53
)
(24
)
(67
)
46
Other, including changes in noncurrent
assets and liabilities
(42
)
(39
)
(49
)
17
Return of investment in equity method
affiliate
(3
)
1
—
9
Change in fair value of derivatives
(2)
7
15
36
17
Adjusted EBITDA
$
269
$
229
$
848
$
739
____________________
(1)
Other non-cash items includes write-downs
of assets.
(2)
Change in fair value of derivatives
includes changes in the fair value of derivatives that are not
designated as hedging instruments.
Three Months Ended
September 30,
Nine Months Ended
September 30,
2021
2020
2021
2020
(In millions)
Reconciliation of Adjusted interest
expense to Interest expense:
Interest expense
$
41
$
43
$
125
$
136
Interest income
(1
)
—
(1
)
(1
)
Amortization of premium on long-term
debt
—
—
—
1
Capitalized interest on expansion
capital
—
1
2
2
Amortization of debt expense and
discount
(1
)
(2
)
(4
)
(4
)
Adjusted interest expense
$
39
$
42
$
122
$
134
ENABLE MIDSTREAM PARTNERS,
LP
OPERATING DATA
Three Months Ended
September 30,
Nine Months Ended
September 30,
2021
2020
2021
2020
Operating Data:
Natural gas gathered volumes—TBtu
402
374
1,169
1,164
Natural gas gathered volumes—TBtu/d
4.37
4.07
4.28
4.25
Natural gas processed volumes—TBtu (1)
208
190
593
597
Natural gas processed volumes—TBtu/d
(1)
2.26
2.06
2.17
2.18
NGLs produced—MBbl/d (1)(2)
141.46
133.11
135.41
122.29
NGLs sold—MBbl/d (2)(3)
143.32
138.55
137.02
127.66
Condensate sold—MBbl/d
5.80
5.58
6.44
6.50
Crude oil and condensate gathered
volumes—MBbl/d
97.70
138.02
107.30
121.38
Transported volumes—TBtu
491
440
1,539
1,532
Transported volumes—TBtu/d
5.33
4.78
5.62
5.58
Interstate firm contracted
capacity—Bcf/d
5.62
5.73
5.96
6.00
Intrastate average deliveries—TBtu/d
1.69
1.74
1.64
1.83
____________________
(1)
Includes volumes under third-party
processing arrangements.
(2)
Excludes condensate.
(3)
NGLs sold includes volumes of NGLs
withdrawn from inventory or purchased for system balancing
purposes.
Three Months Ended
September 30,
Nine Months Ended
September 30,
2021
2020
2021
2020
Anadarko
Gathered volumes—TBtu/d
2.18
1.94
2.10
2.04
Natural gas processed volumes—TBtu/d
(1)
1.98
1.76
1.89
1.85
NGLs produced—MBbl/d (1)(2)
127.71
120.80
122.91
109.29
Crude oil and condensate gathered
volumes—MBbl/d
70.36
104.93
76.99
93.65
Arkoma
Gathered volumes—TBtu/d
0.40
0.41
0.40
0.42
Natural gas processed volumes—TBtu/d
(1)
0.07
0.08
0.07
0.08
NGLs produced—MBbl/d (1)(2)
4.76
3.94
4.25
3.96
Ark-La-Tex
Gathered volumes—TBtu/d
1.79
1.72
1.78
1.79
Natural gas processed volumes—TBtu/d
0.21
0.22
0.21
0.25
NGLs produced—MBbl/d (2)
8.99
8.37
8.25
9.04
Williston
Crude oil gathered volumes—MBbl/d
27.35
33.09
30.31
27.73
__________________
(1)
Includes volumes under third-party
processing arrangements.
(2)
Excludes condensate.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20211101005362/en/
Media and Investor Matt Beasley (405) 558-4600
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