Enable Midstream Partners (ENBL) 1 May 192019 Q1 Earnings call transcript

Good day, everyone, and welcome to the Enable Midstream Partners' First Quarter 2019 Earnings Conference Call and Webcast. All participants will be in a listen-only mode. [Operator Instructions]. After today’s presentation, there will be an opportunity to ask questions. [Operator Instructions]. event recorded. today's note also is being Please At call of over I’d like Investor the conference to turn to Mr. this time, Relations, Enable's Senior Director Matt Beasley. Mr. please Beasley, ahead. go

are Presenting you John and Chief this Thank morning, our our everyone. Officer. good morning's and and Laws, call Rod Financial CEO; Sailor, President on

SEC. the XX-Q other release we the issued earnings team press room with Earlier today also have management questions. morning, We to filed this Form our and the members of in answer your our

press XX-Q all that in of Form earnings accompanies this the section presentation Our and the release, filing Relations site. call available our are Web Investor

Actual be We could our from and include also can the statements to differ Web a of Today's projections factors in that projections from discussion posting results will be laws. today's SEC actual forward-looking call found of to could our results a replay differ meaning cause within materially will discussion the of site. securities filings. the

measures which I invite for you turn be statements the measures of financial the forward-looking We referencing Sailor. presentation. We the that, non-GAAP reconciled in to get With this today's we'll disclaimers in over measures. the today's and GAAP we on non-GAAP to and will nearest Rod to both have appendix also financial started, presentation call, call review will

natural to condensate volumes. start Enable natural natural Compared processed, Thanks, in great transported performance. and with measures gains adjusted XXXX key DCF to gathered, strong saw Matt. Good Enable EBITDA financial morning as and gas and net including as quarter operational thank you another including and in quarter gas for call. had first joining gathered income, oil gains us a well of financial on of operational the today's crude XXXX, and key measures gas

distributions of quarter. a declared spending X.XXx, funded of which expansion to coverage strong our the nearly contributed and XX% distribution ratio results capital financial Our in

to continues processing and our And growth activity crude by slide, oil footprint. expanded the and systems. serve high Enable’s we driven gathering gas positioned Turning gathering quality across segment commercial next well on updates plays our gas natural recently for significant natural are to and producer oil gathering our across crude

crude-directed our drilled focus of SCOOP on the of Velocity’s by we more half crude producer acquisition activity to business active last and our affirm in oil footprint. continues almost drilling condensate expect or crude rigs on gather Continued wells from midstream of the total year oil to

customer day the storage EGT’s that with remain and the transportation for X concluded, capacity extended segment dekatherms per in proceedings including capacity rates current recontracting transportation MRT’s million Spire. Our largest contracted over received XXX-G of first We EGT effect unchanged. and notice have the quarter, all or quarter from in will during FERC

case, MRT’s rate all for resolution Gulf year process XXX-G of been pipelines late for the houses pre-filing final achieved this we update size with to provide opportunities you year of stakeholders continue for starting for scope. Public increase and project. to Run last XXX-G the and month project’s month project. the current last naval to look With outstanding open to the this approval we start the process on hope received important the have I with our milestone later when FERC project We are proceedings resolved. SESH’s an an

the is Anadarko slide, Basin. to highlight Enable why next leader the to Turning market clear the want I in

total X both has crude dedications basin the producer significant gas you in major the for dedicated. natural over gathering oil acres million acreage see can with plays map, Enable As gross from the and across

gathers SCOOP. boasts active crude have this on including system the top-tier those areas in the our many capacity highest system the serve most we through of plays slide. SCOOP Our processing customers STACK highlighted and We and the gathering

currently drilling highest to early level in rigs make significant basin to Anadarko be systems. continue is to XXXX. Enable’s connected customers seen Our wells in the have gathering the with expected XX we investments since basin This the

our to offerings rigs, the condensate expanding gather on these expect our of crude We oil or chain. strategy across by half midstream from value drilled service building further wells of

reiterate needs. close taken has my I pride I strived customers our market partner binding to a in As remarks, fit solutions best-in-class want be and that our to Enable to has to great leading customers’

now I With needs the meet continued in growth quarter to continue the Enable first I positioned call to future. to is discuss that, our John over XXXX those and to financial across will believe results. our turn footprint, the With further strategically operational

cover few morning, everyone. and the will operational key financial good our I metrics a for and Rod, of you, now Thank quarter.

find As of earnings results detailed which comprehensive XX-Q, quarter filed our earlier morning. in always, this release in and our financial more a operational first of and our overview can both you and were

XXXX. X, Anadarko in Turning growth gathering volume Ark-La-Tex activity to and Slide customer of our quarter results in first processing well drove the basins segment compared the and to and

as for to Basin the gathering our period gas systems. we natural crude from The the first XXXX volumes year year. oil quarter to and in and same a compared XX% our see, X% natural increase in of increase driven a total primarily the volumes gathered condensate in acquisition Williston substantial processed as the our gathered in Basin can you ago quarter Anadarko prior gas As had total compared growth volumes increase recent crude well first by a was

potential volumes segment, the third constraints we and transported system, as volumes expect infrastructure our on to year. volume EOIT. mentioned Anadarko helped including case our last Basin Williston EGT’s deferred in in gas be growth in the of increase I EGT, call, an Oklahoma on growth we transported party to increase continue result our Basin a resolved from on result in this the that a capacity project to transportation Intrastate As over for new storage a contracted while production natural of later was see In drive volumes year the the prior XX%

study. discussed compared interest due G&A on our after and were to and slide, Basin, flow and increase compared rates. year in increase in and oil related and O&M first treating condensate gross gains activity. margin, which prior an payroll includes measures due interest costs. Velocity the in the gathered to After was plants Xx. the compressor distribution higher higher X.XXx offset expenses effect maintenance and assets associated in to when net for primarily depreciation rental of acquisition, driven the financed increase expense, derivative quarter, and service amortization gas XXXX Distributable by our higher the cash volumes were Ark-La-Tex increase The interest adjusted an our quarter losses and and higher for increased expense. The higher realized previous new higher next increase coverage outstanding non-cash was debt partially quarter of partially results XX% higher a gross of offset maintaining primarily which income for higher by XXXX. significant first The EBITDA EBITDA Moving to our substantial and a higher driven capital debt adjusted compared and in adjusted items to approximately with by on than expenses, results of crude the when the depreciation associated with was balances on increased the higher by higher with strong adjusting generated liquidity maintenance declared, adjusted by to balance placed The higher expansion on unrealized of to of the higher margin of XXXX. Enable and for driven metric as gross sheet higher and of slide, X% depreciation more higher margin XXXX half which considering was while for the expenditures of in the effects expense volumes XXXX natural by and The EBITDA, by partially by first our amortization the O&M financial our offset distributions EBITDA quarter capital, processed expense quarter first additional

latest the XXXX outlook. performance, results for and outlook financial our Enable is With XXXX our expansion capital including affirming QX our expectations

few continued XXXX value on Turning remain employees grade we strong through investment and equity to sheet solid capital operational to believe are meet coverage what distribution offers the a to no that which with plan. and deliver Enable efficiency, discipline to an I Further, our that illustrate balance program. financial investors. on highlight I to the next incentive cost metrics has and Enable with focus slide, a a metric strong want requirements and all our opportunity business results short-term financially focused are compelling XXXX

not As in reflected and employee we unit is price. current success, illustrate, our financial of record with we believe alignment investors management strength this and

a Our evaluation factors peers, while our is basis yield two on higher. EBITDA to significantly unique significantly lower enterprise value opportunity. These our than imply is value an

and basis Enable allow units sale We of fundamental time. expect a ArcLight’s on overhang reduce will perceived liquidity recent in our trade the more to units, that position increase the entire our over on

drive balance the from unitholders. sheet. That up look now of to our for will execution call to and year, we program invested increased balance portion we believe We of expansion value remain our and the on continue driving substantial questions. competitors focused my strong maintaining cash capital capital the returns our for differentiate with flow our funding retained and our will we As concludes Enable remarks, a your open on

Ladies session. question-and-answer Instructions]. and [Operator gentlemen, the begin we’ll at this time

Mirek Our go first Citigroup. question. Zak from question your comes with ahead from Please today

morning, Good everyone. Hi.

morning. Good

the we’ve materially last Your at play STACK bit have what least. since volumes seemed around the to been from Anadarko not dipped players hearing a quarter other but considering

for So activity were as about perhaps gas diversification of helps volumes an to here obviously dynamics I to growth Could of acreage? to forward was shifting quarter? the of we’re a new oilier would us expect you idea expectations the here but point rig weakness information how much productivity regions talking have going give any existing versus volume you next curious, good might due increased then can or or impacted gotten further producers quarter’s such this And be from on turning a recently. and volumes to sort see activity expect see given we gas

Look, the question. that we’re for seeing with we’re SCOOP. in pleased specifically Anadarko, very, the your Thanks the in very results

seeing story with rig down what of that volumes, the as It acquisition the and On we we activity talking we our SCOOP the your I customers see question areas. STACK Velocity the about late that’s production out started shift producers think of more is in around premise part behind areas the in oil of consistent of higher this that SCOOP. liquid content into XXXX was look, targeting targeting to exactly very in The were were were a stream. anticipated. of rich playing with areas continue out we our Midstream

fact capturing continue. consistent coming that on operators of strong that model type out that we’re our the with type we SCOOP. a It’s put that and It’s the that that the production very formation of acquisition. just higher Velocity wells frankly reservoir would many a They the the in some out. And system. what seeing our We with guidance looks very drilling are little have resource point now SCOOP our curves. I the in in we with that got how group will think We’re at we’ve we and they’re understand have than out both seen Again, group internal And pleased STACK we’ve business. we’ve been curves. – the

a Yes, bit. I’ll little just tag along to that

that over the still XX-hour day. XX results that the are brought online IPs wells STACK that of of number strong. Some had quite a this in We seeing quarter we million a we’re had

well. good got as in the SCOOP, strong in we while activity that is generating growing stable still activity we’ve So STACK have results the consistent and

– And seems higher much capital project? on moving great. there been the with this that similar Gulf recently scope just forward an at have you It provide announced there cost. at Okay, capital project for can update Run, requirement was to

changed project? how So just curious if cost size fairly that of has those low keep aspect and/or you for your capital

No, open expand went talked we there we for increase pipeline. reason We in season at DCF has would of an right X.XX the that the been scope did our only we capital have foundation see the no size a about. X.X – Again, And that remember change to capital other customer we’ve pipeline. we now, DCF. as of

last we today be would final would around the quarter of of pipeline. call here around that size see the that talked sit would believe we our the reason you would increasing on that expand. the to increase hopefully would we be be we second that I able about a we that scope the could only capital pipe call that increase, So on expect as But project. update I

area. to that talk a potential that again, above to could size that growing the second quarter We of go continue customers DCF well past even lot call. in about our we’re X.X activity But seeing

segment storage around the our transportation did was of that recontracting in Some and our we Line CP.

I bode our a and very assets for in area. active our it pipeline in to that it’s think that area general systems and So and continues well

just Thank and to the remain you Can one same? you. extension, of on sort update the timeframe And Spire Okay. give one. final an rates contract the if

As recontracting with – you some we contract this did will Spire summer. into effect around go know, that later

size what was and said the we’ve it will be with the in, It haven’t our expected is disclosed as consistent consistent that of contract is, We we what what contract public goes service. in the XXXX guidance. with I included in when but

Okay, you. That’s me. great. Thank all from

question next question. Please JPMorgan. from ahead from your comes Our Jeremy Tonet with go

guys. morning, couple Rahul is for of quick just Jeremy. on I Good have questions. This

to like, this expect the beyond for drilled about well? how the by trajectory should wells see on you Anadarko’s is gathering? rigs footprint, growth think one, we the what as crude something say, First the you half like, XXXX When Enable’s

we that acquisition. thought recent when we acquisition when we that to would a know, more you made the it made much down multiple As come

We we’ll the time continue SCOOP well of to next believe period play only to producers bodes continue more for that the oilier see acquisition. the Velocity targeting of which over that regions

the but to wanting quote was quarter that expand their don’t facilities. about third me it that was probably potentially think CVR I on talking maybe

be So Anadarko the crude story our going we in Basin. that think to again, they are continuing a growth assets around

made customers We two at success did that And disclosures the continue area their you around on our area well. the here expectations for efficiencies their of in acquisition of and And the follow and that Marathon gaining the system. as great some follow have customers Continental increasing they’ve to areas. time these Yes. and were you that the of were that disclose recently

for question of and believe the So future we contributions over time. your specifically to asset bode that tends to well the additional

housekeeping Got then you. question. And That’s helpful. one

a in distribution equity timing-related remainder the equity is difference there the of Southeast from realizations a XQ, distributions like, the the or good run earnings year? is this the and On between header, for more rate

what the would the buildup, encourage we of find EBITDA from the adjusted to the the is QX at between there and distributions In QX which together look as both of 'XX those difference What you’ll earnings fairly of is stable you 'XX. equity and over you see affiliates. do

guys. Got you. That’s helpful. you. me That’s it from Thank

you. Thank

comes Coleman of Our go next with Merrill ahead America Bank Lynch. question from Dennis Please from question. your

[ph] Prior on This Coleman. Good for morning. Dennis is Jason

Good morning.

MRT later. quarter. might the bit go you great disclosed I is to maybe touch the that talk could And little timeline, effect the in about as a projects? of Congratulations this to it’s a it some can know is mentioned there also to you on a more summer. little later the be talk, into STL dependent expected little on wanted extension bit guys terms of the dynamics maybe bit more one are Spire’s extension. then relates it about speak of But the sort you I the year? pipeline, it terms build of And that things a on

we’ve clarity that comes flat. rate back We be. the publicly Lateral be into turn back about service. And to turn our long is pointed what that said what to on don’t once cost system the would MRT expect MRT always expect filings. have in REX we’ve we contribution Well, that anticipate We again recovering term through we

of that, than on So we’re building. from recover XXXX rate the now. on the We me, we go that a November – trial the that back to will any able in of turn right that’s – the Other Lateral REX Spire – all excuse to again anticipate is anticipate judge that being case really process

this early decision. settlement, ultimately And would if bleed a we into XXXX, it don’t reach

exposure. the any the again much on bit was of of think It color. way price question to like commodity a little or and seems by there hedging around commodity a Is affected how great. impact? Okay, going movement Thanks quarter. there’s in were earnings My last for number about sort

can in I but Yes, for our disclosures you quarter. focus the on

a and on Slide fair about in of But in XX of detail appendix. in was some was the of look that, gain it deck million loss the associated on change activity. $XX derivative $XX for with value there the at the was loss million quarter earnings in total way is We that our also the realized include X on to total in in there million derivatives.

where book with our was which mark-to-market if remembering on the correctly. beyond period had fair $XX slides, positions. those we the I’m we the unrealized for So value It in we’re periods every And gain commodity the quarter you recall on extend derivative of that derivatives quarter million is in a those the that fairly significant XXXX reporting. fourth from might change

increases of seen through some turnaround the first so saw we And price crude that quarter. we’ve in the with that

looking Okay, you. them Oklahoma. on one sort And at are a are We’ve if activity that of any of terms a playing sort Is in now. them of and moving heard actually of more, maybe you in transitory that out of little there how of Great great. producers from see few bit state a Thank a cutting wells could, number right forward? off expectation rig I some sooner.

look, We don’t with really guidance any Yes, our there think rig forecast change we to put activity have in guidance that. in we per I don’t but se really are. expectations what our

we and the and the remarks about excited We both of along we’re as continue very some believe are strong activity that results in we’re those our presentation continue during we The to mentioned commentary. opportunities see speak to his in STACK and strong see the and Very in seeing. strong. in that that SCOOP results out of the seeing John have still presentation. we’ll We to that activity footprint. activity our Again, the

that to in believe system cases continue our well, to most expectations. directing performing are very we and hydrocarbons that above that our We the have are customers

with SCOOP comfortable bullish guidance very outlook for very that the we’ve the we’re again, so and put out. the on And

Okay, Thank again. off. you, I’ll great. step

Instructions]. [Operator

next Our Please Tillett ahead from question. question Barclays. from go your Chris comes with

morning. Good guys. Hi,

if projection of from of just are could, your alluded sort on to in ethane give level what maybe the could you’re could, a you material on maybe built in into you system you where Just your seeing level any you’re then But today, across of release. difference on And rejection, seeing contracts if of quick terms kind your if of the one us you’re an at me, press update priced? what’s some guidance? based

rejection the out – price, today We’ve we been certainly basis to our that our if of leading Mid-Con we see in of and is we of where that across be to on a tends of within continues facilities, a of certain recovery on rejection those find coming regular certain our in the optimize net facilities. it basis, daily What is weekly. not and certain mid-shift until bag. generally. be some price are wide But It’s again, around gas across one basin to mixed the

So seen any given of but the different, we’ve a recovery. rejection answer can on bag generally day mixed than be more

would I we with throughout seeing XXXX. think anticipated what also And consistent say, that’s I

Okay, that’s helpful. you. Thank

this the turn I’d session. and conference call question-and-answer for like gentlemen, to ladies any to And time today’s Sailor remarks. we’ll conclude at back Mr. closing over

have strong very I you with Thank dedication. interest you you. day. We thank direction quarter; appreciate for interest. want in employees a on results pleased we want reiterate, heading very Please, exceptional and had safe to recognize and in in I call. all the the our work Again, that think I hard company. all we’re to their the of the I everybody of XXXX. everybody, a also Thank your your

attending thank today’s gentlemen, call. will presentation. that conclude for and We Ladies today’s you conference

You may lines. your now disconnect