EnLink Midstream Increases 2021 Guidance, Forms Carbon Solutions Group, Announces Participation in June Conferences
EnLink Midstream has increased its financial guidance for 2021 due to strong commodity prices and rising producer activity. The company projects net income to rise by $60 million, reaching $135 million at the midpoint, and adjusted EBITDA is set to increase 7% to $1.04 billion. EnLink also forecasts $350 million in free cash flow after distributions. Additionally, EnLink announced the formation of the Carbon Solutions Group to explore carbon capture projects, leveraging its extensive Louisiana pipeline network to support decarbonization efforts.
- Net Income guidance increased by $60 million to $135 million at midpoint.
- Adjusted EBITDA guidance raised approximately 7% to $1.04 billion.
- Forecasts $350 million in free cash flow after distributions.
- Increased capex range to accommodate higher volumes in the Permian.
- Formation of EnLink Carbon Solutions focusing on CCUS opportunities.
- None.
DALLAS, June 3, 2021 /PRNewswire/ -- EnLink Midstream, LLC (NYSE: ENLC) (EnLink) today announced an increase to its financial guidance for full-year 2021 following continued commodity price strength and an increasing of producer activity. In addition, EnLink announced the formation of a group to pursue energy transition opportunities, including projects in carbon capture, use, and sequestration (CCUS).
"We are pursuing exciting growth opportunities in the Permian and Louisiana, as well as experiencing improved activity in Oklahoma and North Texas," said Barry E. Davis, EnLink Chairman and CEO. "Coupled with our commitment to capital efficiency and execution excellence, these opportunities have resulted in a substantial increase to our 2021 EBITDA and free cash flow outlook.
"I am also excited to announce the formation of EnLink Carbon Solutions, which will pursue carbon capture opportunities. EnLink has the largest intrastate network in Louisiana, which connects us to industrial customers in one of the areas with the highest concentrations of C02 emissions in the nation. We are uniquely positioned to launch CCUS ventures that will move EnLink and our industrial partners toward mutually beneficial decarbonization goals that support the global energy transition, while also driving value creation for EnLink and our unitholders."
Increasing 2021 Financial Guidance
EnLink is raising its full-year 2021 financial guidance following a review of business activities. EnLink continues to benefit from a supportive commodity price environment and a ramp up of producer activity. Net Income guidance is increasing
$millions, unless noted | Prior | Updated |
Net Income | 45 - 105 | 125 - 165 |
Adjusted EBITDA, net to EnLink | 940 - 1,000 | 1,020 - 1,060 |
Capex, net to EnLink, & Plant Relocation Costs | 140 - 180 | 165 - 195 |
Free Cash Flow after Distributions | 275 - 325 | 335 - 365 |
Debt-to-Adjusted EBITDA* | 4.2x - 4.4x | 4.0x - 4.2x |
*As calculated under EnLink's credit revolver
To accommodate higher volumes in the Permian, EnLink has increased the capex range modestly. Through capital light expansions, EnLink will increase Midland processing capacity by
An updated investor presentation is available under Events and Presentations in the Investors section of the Company's website at www.enlink.com.
Adjusted EBITDA and free cash flow after distributions used in this press release are Non-GAAP measures and are explained in greater detail under "non-GAAP Financial Information" below.
Formation of Carbon Solutions Group
EnLink has formed a new group, EnLink Carbon Solutions, to identity and pursue energy transition opportunities, including a focus on CCUS. The group is focused on finding CCUS synergies that align with EnLink's extensive Louisiana footprint, which contains approximately 4,000 miles of pipeline and is connected to one of the nation's largest concentrations of industrial CO2 emissions.
EnLink and its predecessors have decades of experience operating in Louisiana. EnLink Carbon Solutions will build upon longstanding customer relationships by developing carbon solutions service offerings that are mutually beneficial for EnLink, its customers, and the State of Louisiana. The group will specifically focus on opportunities for additional assets and service offerings that are tailored to meet energy demand and are supportive of the ongoing energy transition.
EnLink has appointed Scott Goldberg as the leader of the Carbon Solutions Group. Goldberg joined EnLink over a decade ago and has a background in engineering, legal, and corporate development that will be well suited to developing opportunities in his new role.
Upcoming Conference Participation
Representatives of EnLink will participate in virtual investor meetings at the TPH Hotter 'N Hell Conference on June 10 and J.P. Morgan Energy, Power and Renewables Conference on June 22 and 23.
About EnLink Midstream
EnLink Midstream reliably operates a differentiated midstream platform that is built for long-term, sustainable value creation. EnLink's best-in-class services span the midstream value chain, providing natural gas, crude oil, condensate, and NGL capabilities. Our purposely built, integrated asset platforms are in premier production basins and core demand centers, including the Permian Basin, Oklahoma, North Texas, and the Gulf Coast. EnLink's strong financial foundation and commitment to execution excellence drive competitive returns and value for our employees, customers, and investors. Headquartered in Dallas, EnLink is publicly traded through EnLink Midstream, LLC (NYSE: ENLC). 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.
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 extinguishment of debt; unit-based compensation; income tax expense (benefit); unrealized (gain) loss on commodity swaps; relocation costs associated with the War Horse processing facility; (gain) loss on disposition of assets; accretion expense associated with asset retirement obligations; (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 capital expenditures, excluding capital expenditures that were contributed by other entities and relate to the non-controlling interest share of our consolidated entities); (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); (accrued cash distributions on Series B Preferred Units and Series C Preferred Units paid or expected to be paid); (relocation costs associated with the War Horse processing facility); (payments to terminate interest rate swaps); non-cash interest (income)/expense; (current income taxes); 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 and free cash flow after distributions are both used as metrics in our short-term incentive program for compensating employees.
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 ENLC's filings with the Securities and Exchange Commission 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 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," "should," "plan," "predict," "anticipate," "intend," "estimate," and "expect" and similar expressions. Such forward-looking statements include, but are not limited to, statements about guidance, projected or forecasted financial and operating results, expected financial and operations results associated with certain projects, acquisitions, or growth capital expenditures, future operational results of our customers, results in certain basins, future cost savings or operational initiatives, profitability, financial or leverage metrics, the impact of Winter Storm Uri on us and our financial results and operations, including the impact of any customer billing disputes and litigation arising out of Uri, future expectations regarding sustainability initiatives, our future capital structure and credit ratings, the impact of the COVID-19 pandemic on us and our financial results and operations, 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) the impact of the ongoing coronavirus (COVID-19) outbreak on our business, financial condition, and results of operations, (b) potential conflicts of interest of Global Infrastructure Partners ("GIP") with us and the potential for GIP to favor GIP's own interests to the detriment of our other unitholders, (c) GIP's ability to compete with us and the fact that it is not required to offer us the opportunity to acquire additional assets or businesses, (d) a default under GIP's credit facility could result in a change in control of us, could adversely affect the price of our common units, and could result in a default under our credit facility, (e) the dependence on Devon for a substantial portion of the natural gas and crude that we gather, process, and transport, (f) developments that materially and adversely affect Devon or other customers, (g) adverse developments in the midstream business that may reduce our ability to make distributions, (h) competition for crude oil, condensate, natural gas, and NGL supplies and any decrease in the availability of such commodities, (i) decreases in the volumes that we gather, process, fractionate, or transport, (j) construction risks in our major development projects, (k) our ability to receive or renew required permits and other approvals, (l) 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, (m) climate change legislation and regulatory initiatives resulting in increased operating costs and reduced demand for the natural gas and NGL services we provide, (n) changes in the availability and cost of capital, including as a result of a change in our credit rating, (o) volatile prices and market demand for crude oil, condensate, natural gas, and NGLs that are beyond our control, (p) our debt levels could limit our flexibility and adversely affect our financial health or limit our flexibility to obtain financing and to pursue other business opportunities, (q) operating hazards, natural disasters, weather-related issues or delays, casualty losses, and other matters beyond our control, (r) reductions in demand for NGL products by the petrochemical, refining, or other industries or by the fuel markets, (s) impairments to goodwill, long-lived assets and equity method investments, and (t) 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, LLC's and EnLink Midstream Partners, LP's filings with the Securities and Exchange Commission, including EnLink Midstream, LLC's and EnLink Midstream Partners, LP's Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, and Current Reports on Form 8-K. Neither EnLink Midstream, LLC nor EnLink Midstream Partners, LP assumes any 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.
EnLink Midstream, LLC | |||
Updated Forward-Looking Reconciliation of Net Income to Adjusted EBITDA and Free Cash Flow After | |||
(All amounts in millions) | |||
(Unaudited) | |||
($MM) | 2021 Outlook (1) | ||
Net income of EnLink Midstream, LLC (2) | $ | 145.0 | |
Interest expense, net of interest income | 242.0 | ||
Depreciation and amortization | 604.0 | ||
Income from unconsolidated affiliate investments | (2.0) | ||
Distributions from unconsolidated affiliate investments | 1.0 | ||
Unit-based compensation | 31.0 | ||
Income taxes | 30.0 | ||
Project War Horse (3) | 25.0 | ||
Other (4) | (1.0) | ||
Adjusted EBITDA before non-controlling interest | 1075.0 | ||
Non-controlling interest share of adjusted EBITDA (5) | (35.0) | ||
Adjusted EBITDA, net to EnLink Midstream, LLC | 1040.0 | ||
Interest expense, net of interest income | (242.0) | ||
Maintenance capital expenditures, net to ENLK (6) | (40.0) | ||
Preferred unit accrued cash distributions (7) | (92.0) | ||
Other (8) | 10.0 | ||
Distributable cash flow | 676.0 | ||
Common distributions declared | (186.0) | ||
Growth capital expenditures, net to EnLink and Project War Horse (3)(6) | (140.0) | ||
Free cash flow after distributions | $ | 350.0 | |
___________________________
(1) Represents the forward-looking net income guidance of EnLink Midstream, LLC for the year ended December 31, 2021. The forward-looking net income guidance 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, the financial effects of future acquisitions, and proceeds from the sale of equipment. 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 (i) NGP Natural Resources XI, L.P.'s ("NGP")
(3) Project War Horse includes operating expenses incurred related to the relocation of equipment and facilities from the Battle Ridge processing plant, in the Oklahoma segment, to the Permian segment that we expect to complete in 2021 and are not part of our ongoing operations.
(4) Includes (i) estimated accretion expense associated with asset retirement obligations and (ii) estimated non-cash rent, which relates to lease incentives pro-rated over the lease term.
(5) Non-controlling interest share of adjusted EBITDA includes estimates for (i) NGP's
(6) Excludes capital expenditures that are contributed by other entities and relate to the non-controlling interest share of our consolidated entities.
(7) Represents the cash distributions earned by the ENLK Series B Preferred Units and ENLK Series C Preferred Units. Cash distributions to be paid to holders of the ENLK Series B Preferred Units and ENLK Series C Preferred Units are not available to common unitholders.
(8) Includes non-cash interest (income)/expense and current tax income/(expense).
EnLink Midstream does not provide a reconciliation of forward-looking Net Cash Provided by Operating Activities to Adjusted EBITDA and Excess Free Cash Flow 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. For the same reasons, EnLink is unable to address the probable significance of the unavailable information, which could be material to future results.
EnLink Midstream, LLC | |||
Previously Provided Forward-Looking Reconciliation of Net Income to Adjusted EBITDA and Free Cash Flow | |||
(All amounts in millions) | |||
(Unaudited) | |||
($MM) | 2021 Outlook (1) | ||
Net income of EnLink Midstream, LLC (2) | $ | 75.0 | |
Interest expense, net of interest income | 242.0 | ||
Depreciation and amortization | 604.0 | ||
Income from unconsolidated affiliate investments | (2.0) | ||
Distributions from unconsolidated affiliate investments | 1.0 | ||
Unit-based compensation | 31.0 | ||
Income taxes | 30.0 | ||
Project War Horse (3) | 25.0 | ||
Other (4) | (1.0) | ||
Adjusted EBITDA before non-controlling interest | 1005.0 | ||
Non-controlling interest share of adjusted EBITDA (5) | (35.0) | ||
Adjusted EBITDA, net to EnLink Midstream, LLC | 970.0 | ||
Interest expense, net of interest income | (242.0) | ||
Maintenance capital expenditures, net to ENLK (6) | (40.0) | ||
Preferred unit accrued cash distributions (7) | (92.0) | ||
Other (8) | 10.0 | ||
Distributable cash flow | 606.0 | ||
Common distributions declared | (186.0) | ||
Growth capital expenditures, net to EnLink and Project War Horse (3)(6) | (120.0) | ||
Free cash flow after distributions | $ | 300.0 | |
___________________________
(1) Represents the forward-looking net income guidance of EnLink Midstream, LLC for the year ended December 31, 2021. The forward-looking net income guidance 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, the financial effects of future acquisitions, and proceeds from the sale of equipment. 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 (i) NGP Natural Resources XI, L.P.'s ("NGP")
(3) Project War Horse includes operating expenses incurred related to the relocation of equipment and facilities from the Battle Ridge processing plant, in the Oklahoma segment, to the Permian segment that we expect to complete in 2021 and are not part of our ongoing operations.
(4) Includes (i) estimated accretion expense associated with asset retirement obligations and (ii) estimated non-cash rent, which relates to lease incentives pro-rated over the lease term.
(5) Non-controlling interest share of adjusted EBITDA includes estimates for (i) NGP's
(6) Excludes capital expenditures that are contributed by other entities and relate to the non-controlling interest share of our consolidated entities.
(7) Represents the cash distributions earned by the ENLK Series B Preferred Units and ENLK Series C Preferred Units. Cash distributions to be paid to holders of the ENLK Series B Preferred Units and ENLK Series C Preferred Units are not available to common unitholders.
(8) Includes non-cash interest (income)/expense and current tax income/(expense).
EnLink Midstream does not provide a reconciliation of forward-looking Net Cash Provided by Operating Activities to Adjusted EBITDA and Excess Free Cash Flow 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. For the same reasons, EnLink is unable to address the probable significance of the unavailable information, which could be material to future results.
Investor Relations: Brian Brungardt, Director of Investor Relations, 214-721-9353, brian.brungardt@enlink.com
Media Relations: Jill McMillan, Vice President of Strategic Relations & Public Affairs, 214-721-9271, jill.mcmillan@enlink.com
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SOURCE EnLink Midstream, LLC
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