EnLink Midstream (ENLC) 3 May 232023 Q1 Earnings call transcript

Greetings. Welcome to the EnLink Midstream First Quarter 2023 Earnings Conference Call and Webcast. [Operator Instructions] Please note this conference is being recorded.

I will now turn the conference over to your host, Brian Brungardt, Director of Investor Relations.

You may begin.

morning, good and you, everyone. Thank first Welcome XXXX call. of to EnLink's earnings quarter are the Chief Vice and on call Jesse Lamb, President Officer. Financial Participating today Chief Executive Ben Arenivas, and Executive Officer; to Chief Executive Pinto, is the during Vice Q&A and answer Walter Operating questions any President also Officer, in session. the room

investors.enlink.com. will and our after on replay A our markets our also made yesterday, on closed call available be issued at We presentation and earnings website website. of release the those are today's materials

discussion statements, federal within that laws. only Today's forward-looking undertake the meaning of The or speak no differ files. predictions to results may include results expectations and we date revise. will in projections including statements call, the differ materially of can securities as update and obligation be and this press the Actual SEC of forward-looking cause of and could release, presentation found actual our to factors our from a discussion

Definitions non-GAAP release statements includes also our GAAP available call This release cautionary SEC reconciliation in encourage the of of presentation. disclosures you our the those as in in measures made We measures. discussion including measures review to comparable are our Factors. press other to press certain as under well appendix a the and financial our of pertaining filings, these and heading Risk

open of call prepared Jesse and by the of questions Ben remarks today's leave start brief a then the with We'll remainder set call and and for answers.

like Arenivas. that, to the Jesse to I turn With would call now over

with first everyone. segments. we The quarter each remain today and joining discuss Brian, entered continues our us active customers momentum morning, our good across for results. you as of you, Thank the year Thank XXXX to

in find leverage additional team the ways assets to Our driving attractive continues returns. ground, existing our to

due of the to color lingered the which on an million impact Despite more but an includes earthquake the we adjusted $X.XXX guidance in adverse of generated the impact EBITDA at million EnLink and our is provide to of of pace results, the on call, EBITDA experienced Ben $X.XXX approximately XXXX. midpoint of range quarter we impact, first of to adjusted approximately will billion end $XXX achieve winter billion. on weather $X of Later this our XXXX,

three operate by the we large-scale G&P Today, largest segment, led our systems Permian.

past sets the our future. our above historical XX we've X And we our years, level drives us Over stand solid for well of averaged This system. up the XX% today rigs and activity average. growth today, about across

more past most and we've projects the We needs. Permian X In over double reinvest to volumes X.X MMBtus producer million meeting the quarter, on years the recent to remain attractive in than nearly the day. seen gathered continuing laser-focused per

Phantom last capacity Midland day the we our bought which feet added Late - to year, plant, cubic of million a online XXX system. over brought

We plant in approximately the also quarter day recently million cubic to relocation XXX third our of will Basin, add a second capacity in Delaware first processing our XXXX. of the announced where we feet

supply growth we with industrial This planned. drive decision, our was than gas drive This helped our our partners platform originally to business helps growth service and Coast G&P with end fractionators restart Louisiana our along users both Gulf where earlier NGLs. in

our beyond, prospects very business. our both business excited look Louisiana, for in and we're COX As and we about our for NGL 'XX to growth gas and traditional

CCS to state. deep important used X Class permanent the deployment EPA for news week, the over the state's subject We on to granting as Louisiana wells, COX inject underground are front. that, believe storage. it milestone plans the to public of for an Last commercial Louisiana primacy which promising application decided comment the policy State And primacy is grant for accelerating period, received some in

is and as manufacturing. executed the to low is Investor will discussed providers becoming are our serve mover at scalable over sequestration building real decision Louisiana business. out CCS Day, on and a EnLink's in Carbon global Group we Solutions carbon leader a our catalyst privacy recent now advantage As Emitters first selecting a

to for spur continuing new Louisiana innovation nearly and unique its see action to Last state advantages, to $XX in climate support new leverage and business business the year, pleased investments. business billion developments We're received development.

either These XX investments - or day an under is capacity. our the and Bcf awaiting FID approved build-out capacity include Bcf in of a today, state export capacity of meaningful nation's day operational Louisiana additional X operational a There in of LNG Bcf is Louisiana. construction

Other industries in Louisiana. are making large the state of investments

in ammonia a production construction for Industries $X in facility. a site the Parish Ascension Mitsui the new CF of are example, For blue evaluating billion

tons like also services. expand current They the along natural serve the the Corridor. gas XX transportation COX to these metric million River Mississippi increased beyond and demand the Investments for market

meet our the and summary, very remain high-return we We business. the through our of and beyond. creating In focused value despite about recent XXXX commodity to growing in investing in prices, customers volatility needs are excited sustainable downstream projects on

I'll turn provide to of it results. and financial our an that, With overview Ben over our to operations

good Thanks, everyone. morning, Jesse, and

plant our where with in $XX at XXXX of and segment million for Let's included profit largest operating in the $X.X the derivative million. profit Segment million approximately Permian, came $X.X start of expenses unrealized tied gains. in the relocations segment, first quarter to quarter

X% XXXX derivative quarter decreased of plant the grew sequentially activity, prior relocation the and segment over unrealized but profit year first from Excluding OpEx XX% in quarter.

about our the impacted the earthquake amounted in that XXXX. volumes call, of million lingering first Permian first adversely winter results indicated experienced in and an by we quarter weather in February due of These at end were we As impacts to lower to the $X the of the impact XXXX. quarter

a higher it compared gas quarter. X% natural to XXXX for volumes record fourth impacts, and with was gathering average gathered approximately higher of those from quarter year volumes prior Despite quarter the the XX%

Our X.X day, reflects the volumes and rate averaged MMBtus a growth March weather absent impacts exit about earthquake. strong that an million of the

losses in in strength the segment, unrealized Gas the first quarter quarter. of we the at Segment solid Louisiana. derivative saw XXXX of first million. $XX.X for seasonal $X of Segment profit segment performance now the million. to We quarter came profit in Turning NGL experienced and another included in

of the first impact and quarter. segment year approximately prior Excluding X% of quarter unrealized the the XXXX increased XX% derivative profit from sequentially activity, in

Moving first for approximately Segment million. Oklahoma. quarter of segment We to quarter million up $X.X of $XX.X in the unrealized XXXX. of losses delivered the profit profit included derivative

relocation OpEx approximately quarter. plant profit Excluding the year quarter segment in grew sequentially prior that XXXX derivative decreased from and unrealized X% the activity, of X% first

gas were due and The impact, XX% weather the compared results sequentially $X volumes increased XX% impacted XXXX. of approximately winter the quarter natural the impact by the year to quarter. fourth of first to quarter in lingering weather Despite experienced adversely prior million gathering average

we resilience continue have Oklahoma activity shown We see been from prices, despite has pleased our with levels. commodity drilling robust lower to business the headwinds as

XXXX. seen gathered We double-digit meaningful to volumes see compared in growth to not have our change volume a expect in for we outlook and XXXX,

Wrapping up with Texas, quarter for of was unrealized North million. including the segment $XX.X million, gains profit $X.X derivative

but profit gathering Excluding part closed higher first derivative from compared quarter decreased XX% quarter. XXXX grew activity, in prior of unrealized of prior gas volumes that the but over was the XX% X% the quarter third driven Natural sequentially the segment were year the to by sequentially in acquisition X% year The lower in were the year improvement XXXX. prior quarter.

our and BKV reduce and quarter announced in progressing project fourth an store to make COX to Bridgeport schedule, XXXX. our customer progress facility The of in-service is COX capture emissions to largest previously our ahead early now intensity. expect with North continue We in Texas, from permanently we date solid

results with represent our adjusted in million were results another prior quarter expectations line over growth solid X% robust in $XXX with These EBITDA. and adjusted EBITDA These the drove year. in

are the of range. reiterating we and XXXX, our currently for tracking We guidance adjusted towards the EBITDA midpoint are

has slowdown provided strength Texas potential not February. in in a midpoint Oklahoma second for in the of the of North the view in XXXX, changed of since we incorporated the and activity guidance Our half our and business

Capital EnLink, to still a of to the timing during in $XX.X contributions XXXX. distributions investment overall of million was but contribution CapEx investment these after plant approximately we expenses and resulted quarter $X.X million quarter, million. a joint free flow this of Gulf fractionators. venture and higher This generated $X first Coast timing expenditures million as Matterhorn expected, were The our net the included contributions in contribution to $XXX and relocation cash

sheet times at Moody's side, X.X to ratio be end investment the On positive grade the one a grade S&P. with we the S&P continue a balance in and quarter of at leverage a and strong and outlook at first notch with We investment of remain position below at Fitch liquidity. ample

Consistent offering we distribution our early floating advantage with a unit to plan maximize quarter, quarter rates, over maintained In our an investors, $XXX our which the unit allocation favorable of the per available exposure and increase rate to common return first notes in to closed million represents liquidity. reduce interest take XXXX. of April, tack-on of our to XXXX capital $X.XXX our XX% we first capital

remain our XXXX. complete unit in we with $XXX our program common million This pace million to first unit with Additionally, spent approximately the program $XX us repurchase puts active on repurchase for quarter.

the the led Despite well in the the today, the delivered we In quarter team grow, segment rest first our expect EnLink summary, solid of are continue of Permian. results positioned the to assets volatility, year. our for recent momentum largest the by XXXX, and to

I'll turn Jesse. that, With to it back

us execution well would in for the proud our on year way adjusted of the which I'm of to EnLink. Thank placing be record first their quarter midpoint you, Ben. another our team XXXX, guidance, EBITDA the 'XX for achieve of solid EnLink

the that, may open With now call questions. you for

Capital. with your from our RBC And question the Schultz TJ Instructions] comes proceed first question. Please line [Operator with of

Can that or if to My discussions just lengthy sequestration. due your the just additional Great. get of best how process factors were discussions advancing both? choose for Thanks. in provide are through Day, million you talking mentioned mainly more gating on to COX the $XX the or Louisiana. some deals at emitters on the guys. to Analyst your are Thanks. diligence Good you color What the inked? of transportation the morning, you're emitters first to providers going think active I question, sequestration any

are This the Thanks, side. Those of been on I Day sequester Investor providers. said To the We're emitter date, progressing. is we're side today. the discussions Yes. most lot C.J. activity, both sequestration of in Jesse. seeing with Look, have is our think we seeing consistent what and what morning. with Good a

you when think think deals the up I that's running. off a of some think to Louisiana, catalyst in issue get and primacy these and I about

be levels were will XXXX, good activity optimistic XX that the million a that are very tons. But We we able to metric announce robust. of portion

track. on we're So well

As the of most in provider, those making their good news providers and sequestration EnLink The the as of the discussions. we is emitters choice now. provider choices said, the is are transportation

very positive So a outlook XXXX. for

in Ascension the facility mentioned that Mississippi Okay. million And you quarter, in think, the River some the could market as sense. expand blue Parish I production then such Makes tons. projects ammonia XX metric addressable

market? million Just some upside projects the gauge to how the of you on? that are meaningful tons are the those currently Just do addressable engaged to trying XX to

Yes.

discussions I in think those now. are

of the international I into This think first will that industrial markets. the in the of There's blue green there on interest is table. come the those. products, the one products lot corridor that's out a

a this we So very to growing market. view a as stable market

the be. of growth So Ben... grow volumes a the But online. what for these is the space industrial lot final will continues don't come as international And This as market addressable markets We those. in increase. see FID covering a for new to on have that we meaningful activity facilities their

of blue that a Yes, in blue in the a we that think and able South I very in providers in offers and itself a when And something fact places, an just is provide the North do you I that broaden we because gives industrial product you to and but not of company cost-effective other of to can produce you're have a That some solution. produce underappreciated of that kind that's our product, if ExxonMobil are to is the in CCS that advantage to sequestration think, America just creates you solutions. and Louisiana fact want the about economy. because CCS prerequisite bit markets large TJ, place a potential that competitiveness Louisiana, necessary world South other the think over

one is So facility I think ammonia that the blue example.

market think Louisiana in gas. years, see in examples coming and excited creating natural of CCS the for of be kinds many we'll I South for facilities both those

sense. Makes Okay.

an your lower for natural more switching On double-digit Can activity in gears. kind you activity one from are on many despite volume to to Thanks. Oklahoma, you're change your Oklahoma, guiding still view growth? prices. meaningfully to acreage Just how about talk operating, growth me, what of have on change standpoint gas would rigs just volume

seen X that been the happy with prices. in quarter, challenge resilience happy, prepared we Oklahoma the shown Yes. said on Devon to operated really and gas and first rigs comments, were X in that the being private really the we've We've of by rigs companies. as with operated operating has cap we despite the X in In public being those small remainder a range dedicated of primarily acreage by

haven't our it outlook couple at maybe wells And volume seen point, really edges, material around so a change but has around we of been the edges. in a the this

It would a growth. substantial seeing we before not double-digit take X X about volume that reduction be to from concerned rigs would

again, If very, versus when XQ at we you the today look numbers for year, number seeing pleased. last look you it just reported, XQ for the in very year already this so you're the and number

gave is We midpoint we're make guidance second remind reiterating and possibility the that you the we considered just guess when some the to slowdown see in there including range, I Oklahoma I'd the that half. today. we in would last North the And comment Texas that

Now of still we feel that being We midpoint EBITDA guidance haven't range. good the adjusted we think the we it. that And if even may about see do seen still it, see we at yet.

Great. Thank you.

with next Mizuho. comes the Our Morin line from question question. proceed your Kate with of Please

guys. far getting delay with There's that positioned of are the to talk bit feeling comfortable off. you is out online? could you matter been expansion. how deal little start of Good morning, a Permian a EnLink comes basin capacity how to again Can about the Egress as until Maybe with as just PHP I

basin along being Yes, here's the able of basin our investment, pipelines, Matterhorn the feel have service about Matterhorn get some we went of it's capacity Natural about on good with together entered that We we confident benefit and the pipeline. we able out the to That negotiated Kate. the infill on with other When to into the we comes feel agreement bridge some capacity hold out we get - into why. and being Northern taken that on Whistler transportation with of for capacity. that bridge because

- basis flat perspective, of natural hedged price we our for all substantially hedged this most almost we risk, year. also Waha of a and price From risk all gas our

So shape in terms we're of and both in expectations. the Egress in Permian, good price in

other more any potential I down where additional I become if the out ask you little about, Thanks, any gas equity-backed Ben. systems yours here? with expectations are ancillary, And can private I then maybe coming guess, here, I there, M&A bit guess, have around reasonable guess, curve seeing maybe seller a

it's we on. very too I as some things, what flow. we're we what reality. you we've if the new in a to activity may a to would this tell. environment Markets at for two deals that adjust make past, has more think the and dependent that little drilling for the of And synergies. of work been I well be on deal capital in that's at looking think to we good but been look to the recipe That's worked a economics soon be take the on disciplined lot There operational us. in reliant there execute look last not did are time blueprints said deals kinds And we year, at

market the opportunity expectations. think And as but so on, some we have M&A to has the that goes year I its rebased an don't do may yet

The price considering any could has million here. skewed volatility? you're Ben. of the buyback me, Thanks, maybe see the last excuse – me. a that more one little accelerating stock And chance some share for your is Historically, you volatile programmatic targeting, that, been obviously $XXX

Yes. Thanks, Kate.

very to the of well couple committed in our programmatic approach we're right? The has last years. think worked process, I

pullbacks, see opportunistic appropriate. good probably I you think we'll that. But clearly, when do to this be is it's when the a time

everyone. Thanks, Understood.

with Our comes the your Dounis Citi. proceed next from question with Spiro line question. Please of

Thanks, operator. Hi, guys.

question, just outlook the the touch want year. to the on First of for rest

the And you plan a the soon of first quarter, full strong also comfortable You as of the mentioned range. of ramp place. midpoint the to at it sort pretty I'm year, getting in fairly with the but implies

of to year? pathway get this could you So just speak at the if maybe in the point to gives there and curious the confidence you what sort

Yes, Spiro.

outlook Permian. I especially the think each the in levels confident in very feel current basin, XXXX, third for for when based you ramp activity quarter. look on We've at we that and fourth our the in accounted

So we feel activity very have. counts the that confident based and on our current producer rig we

Ben, So have do there? to anything add you

for the to you at reported gave just we've impacts you and look we Spiro, that adjust that that compare profit weather that provided you'll guidance. we second Yes. annualize if segment and in those, profit the see the

we're that see easily on North and Louisiana You'll in Texas. track

Permian, a in that expect there. a ramp about for Oklahoma. Permian year provided, the expenses excluding The of run quarter a $XXX first rate on was a the significant year million. $XXX bit segment the to have lesser in little versus we and a goes relocation we see we in of ramp as profit extent, million plant the But to

So today, from sit very achievable. where we looks it

it. Got it. Got

Okay.

that So Do to being something That weather the like that you continue? pointed a not service. like guys the March that to that of lot going just XX% expect slides you over out on that sounds XQ, organically, sort from in there's about maybe event. necessarily ramp snapback just is

That's correct.

it. Got it. Got

Okay.

Second question, thinking just about here. sensitivity commodity from

right quarter, the margins biggest the on once us for came Oklahoma anyway. us and Permian of for at Volumes kind seemed about expectations. look we As variance be again, in to in

represent this commodity well point? we Once of think sort you I a margins? hedged floor your rest the as approaching the how at driven, year, some assume well. Are that maybe maybe sensitivity to of guys are about was does impact of weather again, you most point XQ commodity for as

refresh the that. NGL was than so today, the result premised Yes. our any is and we're [ph] reiterating lower the And incorporating And that thinking that crude prices from Well, in our on recognizing midpoint guidance bit good crude the fact $XX so today crude, at market a about below that $XX or the $XX is did still we moved recently a a below we being at feel little bit that, little midpoint. - but yesterday probably even at

of to that's we some feel in where Now we no, crude today can If that's $XX degradation done not obviously, unlimited. lot the where hedging then a we sit are. $XX goes see margin. at for the But you of balance further year, we've - that about good to $XX,

Thanks, Great. Appreciate the guys. again, color,

line Jeremy with proceed Tonet from Please question your Our next of comes JPMorgan. the with question.

Hi, good morning.

Jeremy. morning, Good

I of ahead kind realize a to I'm wanted maybe in just probably bit renewal volatile guess, bit getting kind guys into more of a about are ask, but of trends, And this we as think you there. if little at and commodity JV 'XX, what Dow type myself point you guess, expecting further, I tape. look this the I of

you can where that wondering given Just share broad moved as as with strip the us thoughts any on thoughts trends has activity far now?

optimistic on. the current Yes, we're pullback still and I'll we in when the can think Jeremy, prices, venture. at clearly, thanks for the I the a 'XX maybe commodity details strategic the Yes, growth. that Dow levels, given activity follow question. look we start Ben JV. have joint very that's But specifically and Devon beyond the all - will don't be The Dow, on

system at the early. rolls XXXX. feel we today on that the beyond price - change is of the commodity understand into that confident it will in price From the But would plans today levels working that. that we're But anticipate we based very, seeing that there's current We activity robustness no very our benefit is what environment, current well, 'XX. to

even as long-term commodity seeing agree the a Certainly a Permian, more will North completely and our I commodities robust but and level you Oklahoma outlook of largest are bit growth any challenged Obviously, that. in commodity the see segment. so know, Texas sensitive is Yes. today don't change activity which prices. good, matter, to with we're with

segment. to better to gas, and Oklahoma long North beyond contribute then equal. next year, natural on We Texas the else all Permian the would bullish being on And and ability alongside XXXX little we're expect a bit term, commodities are we bullish be of

That's pivoting here it. of Thanks. helpful. towards Got just And kind very TCS.

to updated process, when Just regulatory guess, it [ph] any you wondering process well When to like doesn't seems the could if VI thinks provide thoughts. tools their - hard it say through of so swiftly. they've the it have Class primacy in but exactly Louisiana move outlined the, of a relates belt the I yet, overall, it's it they how worked, have kind and process that lot to

going expect one on But I when just thoughts your right EPA do well how primacy, other? the it now, versus the VI any to side? guess, mind take long Louisiana Or they either in versus general you processes the on get Class through in just

to it's a The taken X upwards think Jeremy, Yes, VI well historically, I a EPA, approve positive, permit. right? Class it's years of

understanding the talking be that is running been primacy The months. the news XX would Our have to here we're good with to sequester process. XX was that parallel a

expectation the the We very our is to with is in come think XXXX. So primacy, doable. online deal that's

parallel. But and working permits in others Exxon been however, these have

starting not primacy. scratch they're gets So once Louisiana from

yet, So primacy the should they a if at line don't be minimum, have time better. not the again, halved but

very helpful. That's

Just could. a if one, last real quick I

it a As projects, the there. supply pushed was general. back We saw chain little just to construct bit to environment PHP relates

at point? that your for how you're on you? issues like the is trying seeing if Just have projects E&C a what to whistler outlook wondering any sense Just get this

but respect permitting With because update and matter [ph] construction last delays. earlier, - know of we Whistler, sorry. to are or on aware said it I we Matterhorn with are aware respect the of - don't you any that it have on said for, to we're not is Yes. not any I track. We we if

process. the we've the to business, respect started With CCS procurement

time. ample have We

bottlenecks would that a of agreement. delay the that to Permitting is chain project. heard Exxon disruptions ahead start. on well We off of not cause any or started good that have supply We a

supply feel project. the and the chain we about So permitting good with CCS respect very the to

line. the So still on

leave I'll Thank there. you. it. Got

your Satish from proceed with our with And comes line next Please question. the Wells Fargo. of Praneeth question

morning. good Thanks,

potentially not CCS But positive could business primacy until the line. So the your finish is the might flip be like I finalized side, it getting getting to understand approval I get think, I on seems if deals for XXXX. it Louisiana a guess correctly, obviously,

So of think think from in described? projects off wait the of be air emitters and might process that do for sequesters Or you an 'XX? doesn't signing hold deals approval you it matter because where FID-ing do pocket of that and you there here kind for kind parallel

Yes, I process The latter. think the parallel ongoing. is

positive. So on issue the into they're waiting not been it's very think The primacy, It's that. I the entered around register.

You've got the comment period. It's a matter of clearing that.

So certainty gaining around I the think Louisiana primacy.

remember, you if states this. And have North Dakota, other

a and a road there is map there. to So blueprint get

they're at I stage finishing think here. the

as view So getting don't we that signed. to a roadblock deals

I catalyst here. the think them over to if anything, it's hump get a

trend your Got with I Has for reiterated of I think EBITDA XX the it. just from you could at maybe be was could that or you And on flat million. you it all year, that to it but Would CapEx. early guidance then XXXX changed wanted I then initial to if guidance clarify XX the $XXX expect CapEx. And indications provide lower? any on think

on Yes. has for range The not 'XX changed. CapEx

'XX the Now puts we've to the additional growth takes. to the be having that going already to was spending to some in some going accommodate happen And 'XX we that, Delaware. some said and seen late thought there's accelerate opportunity in volume in

bit little to going we're higher a expect there. be we So

in too or say. other to as the may some We activity, on, we in - if again, Oklahoma goes North soon year particularly in see if Texas decreases some see places say, degradation in

top within telling of adjusted towards just It we're and depends the tracking the we're capital you not going in puts EBITDA, midpoint reiterating while it's tell or say [ph] on the the the we're takes the bit of how today, too range. course soon of of range bottom to where go the FID year. to So the be on range. other than some to we're And whether the updating a the little or year end end over on

year spending next CCS too a go as a the soon For prepare bit next project for to have XXXX. year I'll Exxon obvious. service on heavier it's in we year, to the We'll little in state say.

goes we have as As things plant don't. now, year that stand the right right it change may don't now, year Permian next we But project now on.

so puts be little again, XXXX a and there'll be to too And soon specific the about goes too year takes it's CapEx. and on, as

it. Got Thank you.

end back closing Arenivas the call And question-and-answer I'll over we Jesse remarks. have reached session. now of the to turn the for

for Shamali for everyone, morning, thank to your this and call call facilitating and being today support. you, for the on our continued Thanks

As great always, EnLink. and we meantime, have look updating to investment in our healthy, your you appreciate the in continued with interest you we results stay well, In and quarter wish forward second day. August. We a

concludes you your for this And today's and participation. you conference, this time. your may Thank disconnect lines at