Enable Midstream reports $220 million 2Q drop in earnings

 

Oklahoma City’s Enable Midstream Partners, LP reported a drop in revenues and net income in the second quarter as the COVID-19 pandemic hit the pipeline company.

Revenues totaled $515 million for the quarter, a drop of $220 million compared to the $735 million reported in the second quarter of 2019. Net income for the quarter was $44 million, a decline of $80 million from the $124 million reported a year earlier.

Enable saw a 29% drop in crude oil volumes transported through its lines—most in the Anadarko Basin and the Williston Basin.

Net cash provided by operating activities was $111 million for second quarter 2020, a decrease of $101 million compared to $212 million for second quarter 2019. Adjusted EBITDA was $224 million for second quarter 2020, a decrease of $57 million compared to $281 million for second quarter 2019. Distributable cash flow (DCF) was $148 million for second quarter 2020, a decrease of $49 million compared to $197 million for second quarter 2019.

“With producers bringing shut-in wells in oilier plays back to our gathering systems earlier than anticipated, we saw less than expected curtailment of crude-focused production during the second quarter,” said Rod Sailor, president and CEO. “Highlighting the strength of the Haynesville Shale play, the second quarter also saw the highest quarter of natural gas gathered volumes in the Ark-La-Tex Basin since the partnership’s inception. Enable continues to operate at a high level of safety and reliability through these uncertain times, and we remain on track to achieve the capital and cost reductions announced in April of this year.”

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 second quarter 2020 included a $5 million loss on commodity derivative activity, compared to a $16 million gain on commodity derivative activity for second quarter 2019, resulting in a decrease in net income of $21 million. The decrease of $21 million is comprised of a decrease related to the change in fair value of commodity derivatives of $23 million, partially offset by an increase in realized gain on commodity derivatives of $2 million.

 

During second quarter 2020, Enable contracted or extended over 950,000 Dth/d of firm transportation capacity, including previously announced recontracted capacity with Enable Gas Transmission, LLC’s (EGT) largest customer, CenterPoint Energy Resources Corp (CERC). The contract term for most of the renewed CERC capacity is nine years, and the effective date of the new contracts will be April 1, 2021.

On July 7, 2020, Federal Energy Regulatory Commission (FERC) staff issued a revised schedule for the completion of the environmental assessment for the Gulf Run Pipeline project. The FERC’s current schedule anticipates an environmental assessment will be issued by Oct. 29, 2020. The project is proceeding on schedule and is expected to be placed into service in late 2022, subject to FERC approval.

EGT’s MASS project, a supply-driven project designed to deliver gas from the Anadarko and Arkoma basins to delivery points with access to emerging Gulf Coast markets and growing demand markets in the Southeast, also remains on schedule and is expected to be placed into service in the second quarter of 2021.

Enable anticipates more crude production coming on line. At least seven rigs across the company’s footprint were drilling wells and three were in the Anadarko Basin, three in the Ark-La-Tex Basin and one in the Williston Basin of North Dakota.

The partnership’s Ark-La-Tex Basin natural gas gathering system gathered record quarterly volumes for second quarter 2020, driven by continued producer investment in the Haynesville Shale play. Producers continue to bring shut-in natural gas, crude oil and condensate volumes back online, and Enable has not experienced a degradation in production from these wells.

During second quarter 2020, the partnership repurchased approximately $22 million aggregate principal amount of senior notes in the open market for approximately $17 million plus accrued interest. These repurchases resulted in a $5 million gain on extinguishment of debt.

Crude oil and condensate gathered volumes were 84.68 thousand barrels per day (MBbl/d) for second quarter 2020, a decrease of 29% compared to 119.34 MBbl/d for second quarter 2019. The decrease was primarily due to a decrease in crude oil and condensate gathered volumes as a result of shut-in production in the Anadarko and Williston Basins.

Transported volumes were 5.40 TBtu/d for second quarter 2020, a decrease of 11% compared to 6.04 TBtu/d for second quarter 2019. The decrease was primarily due to lower transported volumes due to decreased production in the Anadarko Basin.

Interstate transportation firm contracted capacity was 5.78 billion cubic feet per day (Bcf/d) for second quarter 2020, a decrease of 9% compared to 6.38 Bcf/d for second quarter 2019. The decrease was primarily related to contract expirations, including lower recontracted capacity on the MRT system.

Intrastate transportation average deliveries were 1.67 TBtu/d for second quarter 2020, a decrease of 19% compared to 2.06 TBtu/d for second quarter 2019. The decrease was primarily due to decreased production in the Anadarko Basin.