Enable Midstream Partners (ENBL) 19 Feb 202019 Q4 Earnings call transcript

Good day, and welcome to the Enable Midstream Partners Fourth Quarter 2019 Earnings Conference Call and Webcast. [Operator Instructions]. Please note, this event is being recorded.

I would now like to turn the conference over to Enable's Senior Director of Investor Relations, Mr. Matt Beasley. ahead. go Please

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

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

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

We will replay today's also be posting of call a site. to the

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

financial invite be the the measures to GAAP measures today's also the reconciled measures. financial We call, in disclaimers have statements this will for referencing presentation. which you to today's on both we We forward-looking presentation and nearest non-GAAP of review appendix of non-GAAP

we'll With Sailor. the over turn call and will I Rod started, to get that,

morning, in Good Basin. and crude purchase want and start condensate year, increases condensate today's the of record the XXXX gas significant our crude condensate of our processed, and results my gas gathered, year. Enable change joining the oil assets natural validating by in the year Operationally, XXXX during for transported volumes. us energy during gas thank further Enable volumes I achieved in oil Anadarko gathering drilling rose and Matt. Thanks, Crude to you call. natural challenge gathered the crude for in some drove highlighting significant of oil-directed XXXX. a natural and And industry for for remarks to accomplishments for

year, transportation years demand our the demonstrating transportation life firm contract X.X extended average Through to services. customer for from we during our X.X weighted remaining efforts years, our contracting continued

case recent the during agreed XXXX, with our MRT's in MRT settlement made cases. terms of progress significant rate all pipeline's to have rate and participated also We in we that customers

resulted business XXXX for on We measures, when in DCF ranges expansion and upper of continued and capital XXXX our compared for below in the our performance quarter EBITDA full our Our both capital efficiency fourth higher year to end XXXX. outlook achieved outlook range. and adjusted the both resulted expenditures focus

raising growth distributable we in With by quarterly increased common flow to distribution our distribution coverage. of still continued XXXX, healthy X% return approximately our by the maintaining since the cash unitholders in cash rate XXXX while

year the significant Although of we counts we performance a to have Commodity prices challenges commodity I strong XXXX. in in point and to XXXX, forward in months. acknowledge rig face. want recent had prices decreased And industry U.S. backdrop

positioned Enable well for distribution and these I to current headwinds, strong Enable why investment-grade end environment. well highlight want believe billion is Financially, $X With the XXXX. the liquidity sheet, of as is substantial coverage of of over an market with I balance

asset We a mix business and diversified have footprint.

the best operators results and demonstrating plays. at basins, X SCOOP, deploy of in while include Bakken of significant these areas in customers operators different Gathering improved our Our lower These high-caliber spans some the to business capital and Haynesville costs. plays and Processing continue

plan from But Our to pipeline. pipeline SESH doesn't which it total this XX% the the in interstate and XXXX, XX% we transportation business our provides and with often include business base strong firm a fee-based is storage overlooked. our cash projects. gross our in Gulf grow business This and contribution margin MASS contributed of flows, investment Run of over additional

and late this achieving of sponsors Enable common almost significant combined is on demonstrated and CenterPoint holders cost environment in OG&E. both reduce in well making tied are improve team two following short-term all and prices management costs, XX%. All are rewarded to equity significant focused difficult ownership the our common And through savings our programs we have incentive We compensation sponsors units. a with Enable's aligned employees challenging and with strong with decisions business our management in returns units utility costs And is XXXX. on unitholders, of fall of by to commodity invested capital. common

The Since grown have next natural X over slide years. the gathered our highlights our past volumes continued execution XX%. XXXX, gas

Our have grown transported XX%. volumes

XXXX And program to to and a With self-fund has distributions. strong our improved in capital Enable capital EBITDA XXXX. was our X.Xx approximately XX% of on adjusted distribution able nearly grown coverage focus after XXXX our XX%. business almost Our ratio performance from X.Xx in discipline,

next the to Turning slide.

We a with continue efficiency operating on cost to balance growth focus our and discipline. business

grown significantly have G&A margin. while percentage last and over our of the expense years four improving gross a O&M as margin gross We

As our flows, to in flows XXXX businesses of I cash fee-based fee-based significant over mentioned we hedged. or expect earlier, generate cash our and XX% either be

and level target approximately of to when Our below of which strong peers. is debt-to-EBITDA highlighted our year-end many was X.X, by financial favorable our compared position our

X.X discussions. current The Golden Golden additional the provides update project to expects the in to XXXX, for sized from develop estimate which of customer an be a will our the commitment. allow a would application of per quarter authorization the And Bcf for scope seeking we capital At capacity $XXX file day capacity cost applications scope per subscriptions $XXX the filed project. and ongoing The million, capacity, Pipeline contracted meet certificate Pass' to of that X.X million appropriately total may the meet Run cost estimated approximately the per Pass' FERC commitments. Enable project commitment, Bcf on both first for accommodate project. approximately next with day provide slide by Bcf filed brief would X.X Gulf end day approximately of

footprint connected wells highlights. gathering our fourth be currently with Turning to Producers across gathering remain Enable's XX to quarter rigs Enable's drilling XXXX expected to commercial systems. active

gathering SCOOP and market STACK plays, systems. the remains Enable's in Anadarko of Basin Our be share to the expected rigs with all drilling XX% in wells connected through strong active

Basin and basin Gas the saw in we a still that over between declined Daily highlighting was year, article. the featured Anadarko annual in While rig the a in volumes recent in volumes record rig XXXX, growing disconnect counts activity

In XX% quarter the in of average compared a when to cycle saw the basin operators XXXX, time of ago. third year improvements

and continued the results. Anadarko in the which operators reached continued with are acreage in of significant with gathered some significant XXX,XXX Enable's remained Basin. capital that drilling the We the fourth allocate barrels best crude of basin favorable per to positions partnered growth And is by driven volumes core strong. and areas deliver the primarily quarter, day, oil condensate in Crew-directed

million on transportation its Line capacity CP during the has approval. CP. EGT day extended associated in contracts or subject XXXX, In of our FERC segment. fourth And dekatherms firm per transportation and dekatherms in increases quarter with transportation storage cases the seen or X.X EGT contracted rate service business, Enable are contracted to that over including MRT fourth of Line day activity over extended on quarter, continued per XXX,XXX

of third-party on to in FERC for Upon become agreed And XXXX. settlement cases. in pipeline's of that into that effective first the pipeline's I with FERC prior to new capacity customers, mentioned, capacity all to the case MRT XXXX. refunded of date will rate recognizes have firm newly MRT's previously not agreements effective upon participated been customers to the and now amounts XX% approval half in the rule rate the approval. will recourse and approval. rates necessary proposed but the of reserved MRT make settlements, As has negotiated the FERC rate settlements terms of extended income expects MRT the periods refunds any recent

higher the the MRT than in settlements approved be old XXXX revenues were rates expects turnbacks. capacity by XXXX, to and unaffected recognized MRT Assuming are for XXXX on volumes the that in revenues

strong I with Even section, what with the reiterate Enable how want we challenges of year expect execution. pleased current XXXX this market close am the XXXX. accomplished I just be As to environment, of to I in another

call now to operational will that, to fourth quarter discuss John With further I our year XXXX and over financial results. the full and turn

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

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

the overview Customer drive Turning segment. growth and Gathering to in the and slide. our results operational Ark-La-Tex to volume Processing Anadarko continue activity Basins in well and performance

volumes As oil year Williston gathering result acquisition system compared well XTO. XXXX. full gathered year crude was in Basin you can a and see, drilling X% volumes crude in as XX% gathered in year increase increase increase of in the and a full our increase condensate gathered in for natural prior continued to primarily activity in and we oil gas by Basin processed volumes Anadarko by a XXXX as gas the had as condensate crude natural driven a volumes to X% compared The XXXX our substantial

prior In result our segment, the CaSE increase an XX% contracted transportation year Muskogee over EGT's storage and EOIT's project. was volumes project volumes our from including a of capacity, and in newly transported

Moving to slide. on financial our next results the

EBITDA compared Our gross fourth XXXX gas QX quarter after for by compared 'XX increased condensate, year natural driven water and when to margin to crude both adjusted was full items, higher QX management driven The oil, noncash system increased EBITDA for which and was increased business gathering the activities. adjusting XXXX. 'XX adjusted higher by fee-based for and

in increased XXXX, was to on gains realized the by natural business condensate NGL full margin increase year For year fee-based and XXXX full derivatives. compared an gathering increased and gross gas, driven

due For and to pipeline when well G&A, higher loss the assets. primarily services partially year gross as a increase offset of in work payroll outside O&M as storage to XXXX, retirement costs integrity and costs in both on compared quarter associated and the increases by with fourth was safety XXXX full and margin

These interest result driven increased increased X% integrity storage flow higher pipeline year-over-year primarily as work. Maintenance offset adjusted year-over-year of by cash expense. X% quarter-over-quarter. a Distributable partially by were adjusted and EBITDA, safety and increased by capital higher increases also

segment. cash driven capital. in a Gathering as of to decreased fourth measures The was reporting XXXX. year primarily flows with and of in impairment cost and charge compared for both partnership's $XX when a forward goodwill weighted million prices the impairment quarter associated period to net activity was full an each increase and forecast the The commodity the decrease in by Our decrease related income for reduced result a average unit Basin lower noncash and Anadarko of Processing producer XXXX

expenses, higher of and income O&M year by also and XXXX. higher fourth the Net interest was higher amortization both depreciation expense and for impacted full quarter expense

fourth gain $XX gross a net of XXXX, million of For income the fourth a on on gain a margin compared to activity for quarter XXXX, in quarter derivative million. decrease activity derivative $X million included in Enable's resulting $XX

generated for XXXX. and an year quarter Enable fourth for declared, distributions X.XXx distribution the considering of a impressive the full of X.XXx After coverage the

range have we and that and XXXX, to provided a approximately at For outlook of in levels. previously the affirming and the we order EBITDA Xx. adjusted income, midpoint approximately commodity ranges above for would ratio leverage X.Xx coverage from activity of for to producer need are of said, Enable include the to for financial current or perform distribution improve DCF, net prices That the

remarks, Rod efficient acknowledge of the the current As I capital of challenges reiterate a the close and discipline strong my financially call. asset is with I to made the remain at cost and environment, We points diverse, focused beginning on high-quality Enable will deployment. want the base.

Rod. back turn now will I the to over call

John. Thanks,

Turning some next takes with key strong its for pride you in focus to our share areas position. Enable the the financial year. I to want slide, of

substantial XXXX outlook, credit cash our our As plan we in generate flow in we maintaining investment-grade XXXX to highlighted metrics. while have

Our opportunities, opportunities to and high-value commercial excellence, cost across enhancements. optimization we system continue revenue to see provides and footprint. for remain We new identify we additional significant and opportunities committed our integrated large savings

commercial new program be to will And activity. of projects capital to customer laser-focused by on our commitment pursuit for expansion Our our continue discipline. rightsizing balanced remain we capital

for strong and built a long year. developed the expand term, sustainability company Enable end the issues by have to we is a Finally, on that plan important our reporting the is of

questions. will the your up now concludes open call remarks This for and my we

And comes from Instructions]. question Moreen [Operator Mizuho. first Gabe the with

a just O&M question had on I trends.

XXXX onetime were in the services. outside we referenced Or a think tick came run comments, for should up? expecting. of you what O&M as sort bit I on your O&M about rate above context how within think that the of we XQ And a we I of think guidance? XQ think Should

Yes.

fourth onetime you a that of had to as hiccup break/fix should had think the I We some we into of pickup. think that kind that put quarter.

looking Got at Are potential to capacity others? talk commercial of can you're you're it. achieve? combinations basins some rationalizations yourself where some -- of you trying you're the with maybe And any there and lower seeing maybe Rod, objectives or sort about of activity, third some the parties and between

efficiency around can avoid ours we'll do some ways be there already all the Look, place, by in to or we other someone capital on either XXXX use Again, time. that that, outlay more are focused that facilities whether offloads methods that Sure. we potentially or some are else's.

me. And last for one maybe Okay. then

noticed put sequentially, significantly, Then your slides, did As what's what you're didn't seeing? on guidance I'm you'd, you want noticed where volume oil there based Williston XQ I outlook guidance? like also, crude were in over guess, I that? seeing that Can And the outlook quarter. sort XXXX you Is current if volume-wise the to areas the of last and in speak pretty that you to I shift XQ, volumes down right. embedded any

Yes. No, question. great

in past, volume is with financial guidance. were, the of we what the done years reaffirming on we've information out First, pulling consistent focused again, some

primary that so was And the rationale there.

questions continue infrastructure deferral activity to related we to of some ask see issues. up you Bakken, the there around As some

we're debt So area. build of a in sort seeing that count

And that we're so that, not guidance off we but activity giving 'XX, pushed may some the little don't -- seeing think into getting back early I give down of a any 'XX. half to we're to want 'XX volumes past bit. push

producer other with consistent on what of again, issues. due by to Some constraints November that's some up and it's, our in our were we but some side, infrastructure Not there. thinking of

And the Tonet comes [Operator with question Instructions]. JPMorgan. Jeremy from next

improve prepared should to of sensitivity think pick of of about be levels remarks, more do far the the being of provide you have? guidance. out was laid to details helpful. just front help the prices hit half could is still guide. guide a would to the think in sure as up anticipate that in the is the the kind through I kind still bit you commodity midpoint as make Or it wanted need parameters Any And could Just about wondering us bottom floor As level? of if talked guide? think in end to the strip you we of you on you us the of is, your what that different I as there bottom a

weigh Yes. I'll will we're in. I mean, start, guidance. again, But and John, reiterating

as So be see some commodity range his at John that think we're need we'll that from the we that comments in be today. -- and made that again, we remarks midpoint. or as from within prices here to we above to sit Clearly, activity help

currently are So drilled, end saw putting impacts that's side say, of we I were year. tail just we little natural November, expecting completions activity a some at the we're I activity would again, back in together those guidance that than would just other We're sit point you we more this not some of completed, off coronavirus, towards in December, from into getting the wells gas, saw footprint, pushed across but not here. think, seeing half areas. but the gas the range, on the as we clearly our impacting,

back add a of out whether we XXXX don't construction setting period. again, for still know there? -- So I half guidance anything current constructive past we're and our want you John, to up

John. it's Jeremy, Yes.

a couple of add. Just to things

we did deck take around I calibrate XX So And assumptions, from your previously sensitivities where would not we this think first, that where strip, with in out the we us The to and current XXXX on may it's question guidance guidance. Page give the on from for with we some us will of things be to to the at within provide at land of morning. now. And sensitivities way our look sort we're assumptions for strip that on in that's range. -- that the we still that based explicitly were out you had the were where ability laid some

point. expecting a maybe it. at Got bit were It from rig slightly direction you And this just here. maybe this a count coming the more than seems different like quarter-over-quarter declined at little

you still still do of at you you bottom Do you forward you of there. provide could do being the Any what guidance, year? type it point? of you kind of As rig expect to there? at see now contemplating look land across Or forward the would stabilize color the declines that count see kind half and going some

-- the for drill it's drilling natural in. in gas. And And oil. just testing Well, we count. mentioned commentary, are say, methods. I on see improved Clearly, again, them focused we areas I it's they're still -- We're the drilling can't Again, it as on that rig or highly my producers would Anadarko, completion areas. Haynesville, dependent largely on other focus seeing also specifically in what is

some want don't as are but efficiencies seeing count of a to just increase a, off are and increased our shows footprint. in rig around we year. I areas, on we later completion's say, increase. Not mentioned, there, would you our DUC So in pushed it But improved couple again, cycle in are focus count. seeing it some leave times material the a I just because until I getting I'd that there again,

activity impairment? it. little want as just a footprint? guys of detail impairment I one have you rig asset could mean, it wondering about give a versus Or the if something that I Got some your different drove count, you good the like just bit And system your Anadarko good there. rest us behind the was the if seems on more the seem this of to And to there's maybe with what have places follow-up Thanks. well. is

commodity fourth about marked activity every NGLs. just of we a our to happens fourth other say, you this And ended we of There's prices from, it, we where about is quarter. think year. It's up the in mentioned, fourth goodwill some across And a when the And factors that that to STACK the couple there. they I'd how where that basis. time. quarter valuation they point Jeremy. to literature rig cost quarter where look that works. removed SCOOP. include ability change had Sure, from test temporary generally, lastly, the in a Yes. there there. in if think That I shift one, some call direct analysis. of some impact market to gets you the as are capital, afforded some year. board pretty We're saw again, And of And decisions year last of they to have the things in the of the the It's multiples look, that not think accounting customer again, of rigs. on at as then it implications It's the considered in

in factors things so it at again, three capital come activity believe rig the three really those increased of current around levels partnership prices, is point we of what of a been units. each low commodity inherent And those coming the and the cost confluence together for is that's of the together,

Got of last one, regards it. With kind target And I just there. to if leverage could.

targeting of talk the that on Or to would sense could to low that just and if market -- lower that anything X, wondering of sentiment given make something about maybe side kind of it to And Just to there's there? number where concern Xs of kind reduce closer is kind market, closer any consideration to distribution bring bringing the in a kind helpful. just or lower, of the you achieve -- level be that a would bit ever ends?

that I'll one. address Yes. No,

priority us First We've is a XXXX for and balance said closing a in sheet. I as always foremost, leverage. ourselves remarks, on key prided strong my in

And be of focus So again, these. leverage -- is the levels, and in costs to on of top two key on we sheet. specifically times focus our now, priorities. kind need balance like key right that We'll on to our work continue

from Kania comes Alex Wolfe Research. question next the with And

you that it to was reading than that a was just question like, the how MVC gave looked number, -- think XXXX? into kind of wondering I if was in right, reading? whole about payment, was in if that And the a the it just XXXX. had was I higher make you XXXX looked I kind think the on update it like XX-K. how a It guess, little related I you bit gross in right about just of

Yes.

where is this think 'XX our I did Alex, MVC contracts MVCs, -- say see what I'd one XXXX set particular, roll-off in So the into on we Ark-La-Tex out referring was of of John. the the of XXXX. in you're to

some area future an we deferrals shifting that. of The We're As production saw curve Rod well mentioned, we out some Ark-La-Tex activity. of into was completion have where seeing that seen periods.

we will as entirely, line revenues the And roll operating more standpoint. So at in MVCs on and time XXXX from our least we'll standpoint, there completely be a of from Ark-La-Tex basis. be again, volume-driven a satisfied, collecting out

over a what from on just see out so to time and expect we And producers. bit the quarter. Haynesville shifted anticipated area growth in based we from continue fourth the It little our our had in has standpoint, conversations been from

is have And it. sizing a to Bcf and Got it like going X.X sounds Run, I Gulf a certificate day. on then the at think the pipe, of

there's there the like as that potentially sizing the that compression could or kind term, by long the of capacity the think something in plus. to I original be X that? just on it future know sense good upsized a a contract in larger as about momentum you over getting still you certificate, could Is of if a the potentially past as talked being that large

Yes.

Yes.

prefiling is is we we've As off Bcf. the made for to as now that We've of continued FERC. for we sit up with upside consistent Golden discussed, signed X.X. with right to look our The the opportunities here Pass X.X X.X.

we're what application we've consistent prefiled. making so And our formal with

on pipe opportunities we're opportunity But we'll think to point to go. We commercial think put to at some as relates of capacity and to X.X our about We'll to time, will in should I have you as, will to there. at commercials always it transportation the new There's a you it we down continue X.X, put orders. queue above -- grow subscribing at At filing we're X.X. make get have to need And have to a into currently Bcf. decision. contracted look

levels have the right the we're filing. But sort you amend within. higher, to the are now, those working of would activity If that see

to conference back to session. And this for concludes the like over any our closing would question-and-answer remarks. Sailor I turn Mr.

you very our recognize work, Thank for for the all today. your in and questions I interest your commentary. on participating thank safe day. employees much in safety. their and for you continued Enable and closing, want I In to have Well, dedication hard call appreciate a focus

Thank attending Thank you. The you has now for conference today's presentation. concluded.

may You disconnect your now lines.