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EnLink Midstream Sees Margins and Volumes Decrease in Q2

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The EnLink Midstream companies, EnLink Midstream Partners, LP and EnLink Midstream, LLC have reported results for the second quarter of 2015.

Second Quarter 2015 — EnLink Midstream Partners, LP Financial Results

The Partnership’s operating and reporting segments are based principally upon geographic regions served and consist of the following:

• the Texas segment, which includes natural gas gathering, processing, transmission and fractionation operations located in north Texas and west Texas; 
• the Louisiana segment, which includes pipelines, processing plants and NGL assets located in Louisiana; 
• the Oklahoma segment, which includes natural gas gathering and processing operations located in Oklahoma;
• the Crude and Condensate segment, which previously was referred to as the Ohio River Valley segment, and which includes rail, truck, pipeline and barge facilities to deliver crude and condensate in Texas, Louisiana and the Ohio River Valley and brine disposal wells in the Ohio River Valley; 
• and the corporate segment, which includes operating activity for intersegment eliminations and gains or losses from derivative activities.

Each business segment’s contribution to the second quarter 2015 gross operating margin compared with second quarter 2014, and the factors affecting those contributions, is described below:

• The Texas segment had a decrease in gross operating margin of $3.4 million for the three months ended June 30, 2015 compared to the three months ended June 30, 2014. The decrease was primarily driven by a $15.6 million decrease attributable to a decline in throughput volumes on our North Texas gathering, transmission and processing assets. This decline was partially offset by an increase of $12.2 million in the Permian Basin primarily due to the Coronado acquisition and organic growth of the Bearkat assets.
• The Oklahoma segment had a decrease in gross operating margin of $8.5 million for the three months ended June 30, 2015 compared to the three months ended June 30, 2014. Of this decrease, $5.5 million is attributable to a decline in volumes. In addition, our Cana Plant was operating at partial capacity from April to late June 2015 for plant repairs resulting in a decrease in gross operating margin of $3.0 million.
• The Louisiana segment had an increase in gross operating margin of $17.8 million for the three months ended June 30, 2015 as compared to the three months ended June 30, 2014. This increase was primarily driven by the completion of the Cajun-Sibon expansion in September 2014, which increased gross operating margin by $16.1 million. In addition, the Louisiana natural gas processing, gathering and transmission assets contributed an increase of $1.7 million primarily due to the gross operating margins contributed by the gulf coast natural gas pipeline assets acquired from Chevron in November 2014, which was partially offset by declines from other Louisiana gas assets.
• The Crude and Condensate segment had an increase in gross operating margin of $32.3 million for the three months ended June 30, 2015 compared to the three months ended June 30, 2014. This increase was partly due to the acquisition of the LPC assets in January 2015, which contributed $14.9 million, and the Victoria Express (VEX) pipeline, which commenced operations in July 2014 and contributed $4.2 million. In addition, gross operating margin increased by $4.8 million from our E2 assets due to the commercial start-up of three compression and condensate stabilization stations during the fourth quarter of 2014 and first quarter of 2015. The remaining increase is primarily attributable to the receipt of a one-time termination payment of $10.3 million in connection with the termination of a customer contract in June 2015.
• The Corporate segment had an increase in gross operating margin of $2.8 million due to a gain on derivative activities.
• The Partnership’s second quarter 2015 operating expenses were $109.1 million, an increase of $35.2 million, or 47.6%, from the second quarter of 2014. General and administrative expenses increased by $1.2 million from the second quarter of 2014. Depreciation and amortization expense increased by $23.2 million, or 31.1%, from the second quarter of 2014. These increases were primarily due to the acquisitions of LPC Oil Marketing, LLC, Coronado Midstream Holdings, LLC and the gulf coast natural gas pipeline assets from Chevron. Net interest expense increased by $9.2 million, or 69.7%, from the second quarter of 2014 due to an increase in average debt. Income from equity investment increased by $1.4 million from the second quarter of 2014.

Second Quarter 2015 — EnLink Midstream, LLC Financial Results

• The General Partner reported net income of $44.6 million for the second quarter of 2015 compared with net income of $62.4 million in the second quarter of 2014. The General Partner’s cash available for distribution was $52.0 million compared with cash available for distribution of $67.1 million in the second quarter of 2014, which resulted in a 1.25x coverage ratio on the declared distribution of $0.25 per General Partner unit for the quarter. Cash available for distribution is explained in greater detail under "Non-GAAP Financial Information," and a reconciliation of this measure to its most directly comparable GAAP measure is included in the tables at the end of this news release.