Lower revenues reported by Enable Midstream

Enable Midstream Partners, LP announced financial and operating results for fourth quarter and full-year 2019.

Net income attributable to limited partners was $18 million for fourth quarter 2019, a decrease of $156 million compared to $174 million for fourth quarter 2018. Net income attributable to common units was $9 million for fourth quarter 2019, a decrease of $156 million compared to $165 million for fourth quarter 2018. Net cash provided by operating activities was $251 million for fourth quarter 2019, a decrease of $35 million compared to $286 million for fourth quarter 2018. Adjusted EBITDA was $274 million for fourth quarter 2019, an increase of $3 million compared to $271 million for fourth quarter 2018. Distributable cash flow (DCF) was $177 million for fourth quarter 2019, an increase of $4 million compared to $173 million for fourth quarter 2018.

Net income attributable to limited partners was $396 million for full-year 2019, a decrease of $125 million compared to $521 million for full-year 2018. Net income attributable to common units was $360 million for full-year 2019, a decrease of $125 million compared to $485 million for full-year 2018. Net cash provided by operating activities was $942 million for full-year 2019, an increase of $18 million compared to $924 million for full-year 2018. Adjusted EBITDA for full-year 2019 was $1,147 million, an increase of $73 million compared to $1,074 million for full-year 2018. DCF for full-year 2019 was $784 million, an increase of $24 million compared to $760 million for full-year 2018.

Enable’s net income for fourth quarter and full-year 2019 was impacted by a non-cash goodwill impairment charge of $86 million associated with the Anadarko Basin reporting unit in the gathering and processing segment. The impairment was driven by a decrease in forecast cash flows as a result of lower forward commodity prices and a reduction in expected producer activity and an increase in the partnership’s weighted average cost of capital.

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 fourth quarter 2019 included a $2 million gain on commodity derivative activity, compared to a $49 million gain on commodity derivative activity for fourth quarter 2018, resulting in a decrease in net income of $47 million. The decrease of $47 million is comprised of a decrease related to the change in fair value of commodity derivatives of $62 million and an increase in realized gain on commodity derivatives of $15 million. Enable’s net income attributable to limited partners and net income attributable to common units for full-year 2019 included a $16 million gain on commodity derivative activity, compared to an $11 million gain on commodity derivative activity for full-year 2018, resulting in an increase in net income of $5 million. The increase of $5 million is comprised of an increase in realized gain on commodity derivatives of $42 million, partially offset by a decrease related to the change in fair value of commodity derivatives of $37 million.

For fourth quarter 2019, DCF exceeded declared distributions to common unitholders by $33 million, resulting in a distribution coverage ratio of 1.23x. For full-year 2019, DCF exceeded declared distributions to common unitholders by $214 million, resulting in a distribution coverage ratio of 1.38x.

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

“The energy industry experienced significant changes in 2019, and Enable rose to the challenge as we set records for annual gathering, processing and transportation volumes,” said Rod Sailor, president and CEO. “As we face the headwinds of 2020, Enable remains focused on operational excellence, cost discipline and efficient capital deployment.”

BUSINESS HIGHLIGHTS

As of Feb. 10, 2020, there were twenty-seven rigs across Enable’s footprint that were drilling wells expected to be connected to Enable’s gathering systems. Nineteen of those rigs were in the Anadarko Basin, five were in the Ark-La-Tex Basin and three were in the Williston Basin. Enable’s Anadarko Basin crude and condensate midstream platform achieved gathered volumes of over 122 thousand barrels per day (MBbl/d) during fourth quarter 2019, and Enable expects to gather crude or condensate from wells drilled by 50 percent of the rigs currently active on Enable’s gathering footprint in the SCOOP play.

During fourth quarter 2019, Enable contracted or extended over 1,220,000 Dth/d of natural gas transportation capacity, including contracts associated with the MRT rate cases that are subject to FERC approval. Enable Gas Transmission, LLC (EGT) has seen a continued increase in activity on its Line CP segment, and in the fourth quarter, EGT contracted or extended over 235,000 Dth/d of firm transportation service on Line CP. On the MRT system, MRT signed over 570,000 Dth/d of long-term agreements in the fourth quarter related to the MRT rate cases, which are subject to FERC approval and include agreements with affiliates of Spire Inc. Enable’s contracting efforts have extended the firm transportation volume-weighted-average remaining contract life for EGT, MRT and Enable Oklahoma Interstate Transmission, LLC (EOIT) from 3.6 years at year-end 2018 to 4.1 years at year-end 2019.

MRT has agreed to rate case settlement terms with all of MRT’s firm capacity customers that participated in the pipeline’s recent rate cases, with 90 percent of third-party transportation capacity now extended into 2024. MRT expects FERC to rule on the proposed settlements in the first half of 2020, and the pipeline’s new recourse rates and newly negotiated rate agreements will become effective upon FERC approval. Upon approval of the settlements, MRT will make any necessary refunds to customers and recognize as income any amounts that have been reserved but not refunded for periods prior to the effective date of the FERC approval. Assuming the settlements are approved in 2020, MRT expects revenues for 2020 to be higher than the revenues MRT recognized in 2018, which were unaffected for the rate case or capacity turnbacks.

Enable expects to file certificate applications with FERC by the end of first quarter 2020 seeking authorization for the Gulf Run Pipeline project. The project scope expected to be filed in the applications would provide approximately 1.7 billion cubic feet per day (Bcf/d) of capacity, which would both accommodate Golden Pass’s 1.1 Bcf/d commitment and allow for additional capacity subscriptions that may develop from ongoing discussions, at an estimated total cost for the filed scope of approximately $640 million, excluding costs related to allowance for funds used during construction. The project will be appropriately sized to meet contracted customer capacity commitments and is expected to be placed into service in late 2022, subject to FERC approval.

QUARTERLY DISTRIBUTIONS

As previously announced, on Feb. 7, 2020, the board of directors of Enable’s general partner declared a quarterly cash distribution of $0.3305 per unit on all outstanding common units for the quarter ended Dec. 31, 2019, an increase of approximately 4 percent when compared to fourth quarter 2018. The quarterly cash distribution of $0.3305 per unit on all outstanding common units will be paid Feb. 25, 2020, to unitholders of record at the close of business Feb. 18, 2020.

Also as previously announced, the board declared a quarterly cash distribution of $0.625 per unit on all outstanding Series A Preferred Units for the quarter ended Dec. 31, 2019. The quarterly cash distribution of $0.625 per unit on all outstanding Series A Preferred Units was paid Feb. 14, 2020, to unitholders of record at the close of business Feb. 7, 2020.

%d bloggers like this: