EnLink Midstream (ENLC) 1 May 242024 Q1 Earnings call transcript

Greetings, and welcome to the EnLink Midstream Q1 2024 Earnings Call and Webcast. At this time, all participants are in a listen-only mode. A brief question-and-answer session will follow the formal presentation. [Operator Instructions] As a reminder, this conference is being recorded.

pleasure Investors. your my Senior Brian now of Director is to host, introduce Brungardt, It with quest proceed Please your may Brian, begin. you -- thank you,

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

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

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

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

With Ben, to of set call with of questions to over Dilanka by prepared and that, open for the the Jesse remainder I We would answers. Arenivas. like leave call turn Jesse, then now brief will the start and remarks call a today's and

discuss you XXXX our Thanks, joining to today Thank us results. first Brian, and good quarter for morning, everyone.

While weather of operations of our were the winter the our the business. resiliency to our quarter, impact the showcase during not immune results

We our needs, incremental encouraged around centers power potential to the the growing continue and power and setup developing longer-term and gas for systems help industries EnLink natural given to data industrial demand including with our artificial be for intelligence. nation's diverse

For of These by strength our million. of $XXX temporary quarter, our the we million expectations of approximately EBITDA the $XX adjusted flow impacts results solid by generated cash line from in winter impacts and were system distributions with free G&P driven and after weather systems. offset volume our the Louisiana of drove

approach execution of to continuing a little we nearly Consistent grow to and with approximately our million repurchased more our years, return to total taking outstanding, all buyback units the outstanding investors, of business. invest capital our X XX% to while over than units $XX

industry as discussed Last continue than both safe, expertise initially providers. our on cost-efficient emitters the provide progress a we linking develop transportation quarter, commitment while COX to the new-build with to CCS sequestration by has pipelines, reliable Despite slower converted front and we and regulatory COX and develop solutions, operating anticipated. COX our been to whole transportation recent we

we However, well as and providing ExxonMobil parties CCS look we discussions are other update an forward opportunities our continuing as regarding when to definitive with reach terms.

to for continue business. our positive momentum we Overall, see

LNG driving of in how and landscape prior is reshaping XXXX, earnest in Louisiana. length at that spoken quarters X the phases in demand in coming, have and starting about of We next wave our growth the

natural and around our color more the I'm impressed Louisiana provide will gas execution. Dilanka quick with strategy,

debottlenecking of to To to Louisiana resupply the critical first eastern secure quick-to-market we've We to is the project as project are fully seeing help customers. market shifting operations. gas customers subscribed their capital-efficient, by our executed that high-quality the dynamics to extent, part look that respond on through natural a they

apparent for look for Louisiana modern policymakers, amazed need though, help natural affordable at the power revolution. more center becomes emergence society just is our particularly have you, of data the the the to to industries rapid power, energy. driven secure demand been occurring Like as by gas we of This Beyond in even reliable Texas. their and are community AI staggering. across but here the early the to the country, demand, get still ultimate initial and right understand and appreciate that investment collective are around North days the that are this in can We growth trying these impact and forecasts consultants, arms utilities

U.S. by in XXXX. was approximately homes. for triple is of Boston consumption put Consulting according to growth in To the to forecasts are equivalent million this consumption there X.X% demand the perspective, total to Group, adding that help electricity XX center XXXX, data more this the While or in

we Bcf the forecast natural to off. What -- of Renewables part. that additional that users is growth business. natural assuming voracious a a be will lift could energy, dynamic, XX/X natural only rapid key baseload for is AI large by a the mix. centers and these for the to and generation. of power on surely accounts for is demand and be expect be change our likely industry natural fuel X consider But this We gas to creating that Wells rising XXXX, gas potential key turn more they this boats play XX% and incremental driver our for Fargo data contributor because or not are will increased a exciting do meet to all that not tide analysts in one industry gas but predict gas drive of run demand

to our up turn To and Dilanka need growing an reliable update commercial about EnLink our natural it opportunities. to customer gas power I'll today to with to provide society. on my needs the for meet provide energy over is executing and affordable to comments, And wrap that, excited modern

would market a quick and supply how we like Last demand I Thanks, shifting and morning, everyone. shareholder Jesse, creating provide Louisiana on and good we are to the discussed update. focused value. Today, quarter, gas

during is value phase which assets realizing I opportunity the On at we our commercial capacity the and full customers, existing call, which with renewal As mentioned are opportunities, contracts up renewed XXXX. renewal phases. rates, included our in vast our gas through higher the our we of XXXX the X Louisiana is annual last has approaching in renewing guidance. first of for successfully represents have in worked opportunity, This the majority financial team incremental margin our an of

approximately Through leveraging the in The are in is to is an opportunities increasing project of cost gas the additional the compression, projects. night, to phase quick-to-market execution project. River feet second we first assets drive attractive mid-single-digit a Last approximately our of some investment we multiple. day. This such to cubic of Mississippi $XX million corridor per supply quarter announced expected debottlenecking XXX with EBITDA results a fourth million XXXX. project by in-service date The

diverse fully pleased contracted with a mix capacity the of are customers. to creditworthy We have highly

position. very Jefferson hub from new our expansion phase demand are existing to market the third to storage response gas the of The of with in in to Mississippi add increasing supply River process our is are gas customers. opportunities increase corridor pleased our of marketing pipelines the new and our regard, to the and Island storage meet we In to this projects and expand

storage this working through capacity We are expansions. we can about excited brownfield as nearly opportunity longer-term double gas our

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

and Dilanka, Thanks, everyone. morning, good

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

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

included onetime OpEx first expenses, by utility true-up costs impacting In $X results plant addition approximately a Permian expense, quarter to relo million. operating the increasing

producers during diverse Our quarter. the mix of active remained

timing. weather Average in lower impacted approximately process the by will volumes XX% gas prior is coming The but results facility quarter. natural enable were phase winter Permian Tiger sequentially of However, online next X% of II the than the growth. gathering and were higher producer the were year and

the quarter experienced quarter benefiting performance price million, $XXX.X derivative came of including XXXX at seasonal of million effects. in $XX.X Louisiana, Gas we in first normal Segment to the along of for segment by unrealized now volatility, Turning results in NGL profit solid from with the strong losses. another segment, driven

grew Excluding XXXX sequentially the compared to quarter impact of grew unrealized XX% approximately first approximately derivative activity, of XX% segment in profit year prior the quarter. and the

of then to we including the Moving Oklahoma, losses. million profit derivative first $XX.X unrealized of of for quarter million $X.X delivered XXXX, segment

quarter, reset decreased discussed of impact first decreased of quarter prior the activity, approximately we the from volumes XXXX and XX% driven sequentially quarter's in the the unrealized in last by call. lower that Excluding contract profit X% segment and year onetime derivative

saw we active our quarter, first the During remain on rigs with acreage. operators

lower winter weather lower quarter gas were a the X% natural volumes gathering as year average compared prior to X% However, and price-related of a the of result sequentially shutouts. cases few and

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

XX% by reset. in quarter, decreased first driven XXXX the prior quarter the activity, the Excluding derivative and segment sequentially contract of profit from unrealized XX% and decreased onetime lower year volumes

lower shut-ins. the X% compared and lower a winter prior impacted were XX% number of and were to sequentially quarter. Oklahoma, volumes price-related by volumes gathering small gas year Natural weather Like

benefited Winter weather G&P headwind of our businesses, asset modest reflect These Gas mix. segment volatility. benefits while our from the short-term results solid Louisiana the our diverse was for a

drove In segments adjusted million quarter $XXX EBITDA. robust our total, another with in

of guidance of for full to are $X.XX the year adjusted our midpoint tracking XXXX. toward billion EBITDA billion We $X.XX

segment seasonality weaker. with let guidance, NGL and quarterly give remind being our don't we quarters some you the experiences Louisiana that While second me seasonally third

flow investment XXXX. the million net at after for plant expenditures, came quarter to expenses Free cash $XXX in relocation quarter approximately and in $XX were the million. first contributions distributions first EnLink of Capital

first position and sheet be end continue the X.Xx ratio On leverage with side, at the in retain very ample of a liquidity. the strong balance we we quarter, a of to

grade recognized S&P quarter, prior to into our Fitch. from BBB the the upgraded credit us moving us profile following upgrade investment During strong minus, and

with a the of allocation XXXX. X% increase common unit over Consistent which maintained unit capital per in quarter quarter, the our of represents first the distribution plan, we first $X.XXXX

program of approximately active program us on first we of pace $XX complete end puts $XXX units, repurchase XXXX, units or XXXX. spent the quarter. unit common million Since our now with repurchase the remain Additionally, XX This XX% common outstanding. in with nearly repurchased million we've million unit our for to approximately

we team I'll the and quarter first Jesse. continue EnLink rest of delivered the that, to summary, in of it With to solid turn results the back over XXXX, expect the year. momentum In the for

of needs solid our and of diverse showcase resiliency customers Thank first XXXX assets. quarter of committed another you, excited to meeting the remain EnLink execution the the that in the with delivered We're our team future The quarter Ben. for in beyond. and XXXX

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

you. Thank

conducting will Thank We Instructions] for now [Operator moment, you. we be a One questions. please, question-and-answer poll while session.

from Our the Spiro comes line first of Citi. with Dounis question

on carbon The a capture, detail on first little if I we Pecan question for was could. Island specifically. more the status of hoping

parties sounded obligations you it call, noted given to in resolution like the just a of last coming all in come all XXXX. quickly, As capture to the the incentivized really some were

into bands So anything on And you read the now I than a better was maybe just update are here? the months lack were ago narrow sort you any in outcomes? of where a the of few potential curious. position we Should on to anything

broader scope in of last to Pecan it's projects. pause update continue. don't Spiro, about Pecan of I lot discussions project. to Yes, Island have question. address today, opportunity think, talked made additional the Jesse. alternatives Island the but for on Those We we progress quarter, additional the a an have Hi, the the defining Thanks and we

soon However, challenging we'll remember, industry, We're update it's a transportation one this an is been as beneficial have working and you. still have that, for as a we more find mutually new option. to and

role emitters at As has had earlier, pace the have define than the industry Until as be taken longer to can't longer it's this I predicted. the sequesters. definitive and of our noted the a then consummated. we proceed taken agreements, they But whole; for we remember,

CCS So experience at we're the in time, space. the same gaining

now is valuable, us facility and operating Bridgeport repurposing and pipe. COX capturing Our new-build profitable experience, both giving and transport of

So we key. think this is

very regulators, are Mississippi the corridor with we with in along the ground, We've experience said River pipe decades-long customers. positioned well

take conviction in We well industrial we've advantage role major believe we're not think to will at we lost play sector. CCS that. all. think a decarbonizing We very the so of positioned And

But as ultimately, longer And timing will hasn't been win. term, believe we planned. we

Got it.

Second for one Ben. maybe you,

Oklahoma. in connections head to about moving bigger if XQ, forward Curious of offset as if are enough you XQ, quarter shut-ins to see thinking the think a impact you some Just items into that mentioned some maybe of we the well some there impacted in and we first that think that. about how --

impact in And in then Permian, early quarter. obviously, mentioned weather the the you

Just exited XQ? like maybe give what looks us for XQ a sense of how and you that

Starting Spiro. most winter here. or for mirror in shortly. Yes, rearview have the a Oklahoma a were shut-in the the bit well schedule of isolated here think of weather the robust activity of actually very in for soft bit It was pretty Oklahoma, days I a volumes very XQ. and in will either coming is between that I be connects little

So the rest of for feel good about year. we Oklahoma the

talked been the furious volume that's growth terms is the is and Midland XQ. had not weather, In of about basin the Delaware. about when growth way the about in think in in This we've winter And would we last this surprising the Basin you after have year, year. flat versus for of pace XQ Midland the Permian, but growth this the in year, flatter the

been The for has Delaware full us.

In will waiting fact, literally offloading speak, volumes what next leg we've of as that's that is on enable coming online. the The news good Permian to growth. we come the been online is plant plant and some

leave it. Got I'll it there.

from the Our question comes with next Fargo. Wells Satish of line Praneeth

I CapEx see and give relates change where CapEx Hub for you the anything guess, us light as update can it, unless an trending you project? 'XX River there Did of to 'XX in to I it guidance? Henry in missed

the I the for for Exxon, remember think be I that in this Exxon placeholder a reduced of got you correctly, if delays the you've for kind mentioned? projects of $XX year. million, some budget then given Could CCS And that

the of has these the guidance million, expansions. midpoint for the Hub in project. dollars reserve gas changed We River with Louisiana the and XXXX that $XXX budget CapEx, Phase picture to is capital Big II some Henry not

say this no rate today, back in is any CapEx, it but there's I year. we even on believe XXXX. here So just addition in about and run than early, the XXXX have of different 'XX course, don't would been to Too for to talk sitting that, materially reason we've

right. in for goes of did arriving slower you're have On guidance spending $XX allow our the CCS side, that, been you're the And for on year CCS at also million XXXX. things as We right FCFAD and have all that. becomes XXXX potentially of than that we it we you have increase in less an today, would it for update develop to could result but likely million FCFAD. hoped, an spend $XX We don't in

your guess, you're Got I X it. million as growth Louisiana think could this kind rates? contract market $XX your look And $XX of at then And under of I much rates Louisiana XXXX? How reprice a guess is transport remaining I I see another it of you where still Phase year. uplift you could getting strategy, your to current think you portfolio bump do in legacy million

system. to the it It's of Louisiana gas Dilanka our indeed assets. doing been recontracting really the speaks value happy the We're with with here. we've very well

this correctly, rates the for already that We're, were year. in see substantially 'XX but in don't rest majority recontracting number renewals 'XX. working As we are of recontracted comes 'XX. the budget. baked uplift baked uplift, in and marginal was most n, a of into 'XX, the the We a on similar this be at might you There the of indicated point,

Thank you.

Our Naomi line next of question comes Marfatia UBS. from with the

an plant question, capacity ahead, give an potential need relocation? like update the Tiger it on as for you around growth has some adding Maybe Delaware. good processing look Can EnLink beyond a II seems the on particularly earlier expectations, follow-up as Permian we us

service of the of to leg Yes. enable we've getting Tiger course, focused on II next growth. It's in been --

the beyond is Xx to processing As looking far good successfully relocated as Permian. an news existing now we've that, plant the

decision that luxury of to And the able the the gives so add closer need. being us time to capacity to

learn a the and to the today our to add So from assets year right producers decision bit we'll think portfolio make and timing us a just share when we time with benefit plans right. bide our to of we capacity relocation, the that's as have carefully watching of time can as is. be more because, We develops get for next a with our that don't the eligible their producers

Great. around I'm EnLink's allocation, [ ], Thanks capital to thought color. switch proposition given balancing high the for buybacks the process between curious the to FCFAD Maybe on value deleveraging? and/or

Yes, we remain returning the on capital focused unitholder. common to

year. remarks, about the outstanding repurchase eliminated we As the unit the authorized of shares said this in for through to prepared the the million repurchase we've years few now, Board past share program And program. execute $XXX we'll common continue that the over XX%

On very to gotten and having slightly the the we balance S&P, minus target. just fact, shape, in below, our upgrade or from we're BBB at in sheet leverage side, good are

on largely So remain going unitholder. common the we're focused to

Thank you.

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

I guess, just bit Louisiana as an frame that more wanted scope the far as potential phases phases of what to could better the come I side for, get to a the update, feel just in and the touch the want of projects, these base time is the to on a fruition? opportunity little

Dilanka on meets quick-to-execute, great project leveraging demand again. indeed ground. project and The example to our a the assets Henry the a immediate good is in that return [indiscernible] capital River of

[ to the bit best The color increase this for million [indiscernible] a contracted to project by market project, creditworthy the of of feet Henry day. cubic with just the fully So is XX compression customers. part the of allowance have throughput thing this ]-inch that connecting XXX River on per a has one about of a we Hub

execution. is that project So well on underway

to demand natural feet on like cetera. the about this, we day. Venture project again, this Global last there by And good more project, expansions, for million deliveries opportunities similar systems et our we interconnectivity, cubic bring per that add storage adding a year to compression the gas XXX also better that to I'll is increase executed is are and even there pipe, news through supply other additional gas working new-build to by

of funnel quite encouraging. the opportunities So is

et new-build mentioned, is demand projects to focused these type that it. bringing I is market team just a debottlenecking the a clearly, bit these pipes, there for cetera, projects very little storage on because, Beyond the but market expansion, take the longer, will

the things really a Kind items you get to frame Got Louisiana of like we come the shouldn't near it. trying accomplished Or are Do in time I that strategy? incremental of when as announcements term any take just in of for kind expect term? together the could near outlined. these

Sure.

I think, can expect Bcf you storage busily marketing that working we the engineering potentially storage on. in and the on near -- X term, are We've expansion something talked we the about the We've completed side. expansion. are studies, the

in FID us our the can next you as expect storage of couple expansion So potentially to well. quarters,

Jeremy, this And Jesse. is

the Let is of on optionality macro. of me envious. kind systems. We've Louisiana just add X We before, of the X our said operate the market redundancy. assets There's

a there's customer try meet to fruit lot low-hanging continue we demand. the of low of So to that -- lot these a --

that I proves this just to continues provide set for of assets owning our it diverse So think business. opportunity future

then wondering. Oklahoma segment. it. Texas and I'm just to just Got go And the to wanted I quickly, North

executing how the at against producer-customer and point? Given given strip feel current segment do that conversations, this guidance your about you

year, to of think activity realization. rearview a We -- headwind mirror get first weather XXXX the quarter. as gets at shut-in most that I segment particularly closer Oklahoma, And bright, to that closer is little closer from we of feel as like I will about look think or becomes there this the I good here in for in the the be things end the say, strip the in shortly. and of Clearly, the But was point. guidance bit a

Markets. next Scotto of Capital Our from comes line the with Elvira question RBC

so guess you believe, the question when some where impact for you I me. from negative are, really I Waha capacity, Any one know Matterhorn prices guys that it takeaway the doesn't prices? impact on see I just comes on. of kind Whistler, Waha have

color just think any would helpful. capacity. But you I some get there be

year we of that haven't at for Waha from much impact We've course, see the significantly what today. gas screen at really on than, you challenges already Waha market. better We hedged seen prices the basis the last

not So direct to a it's price risk us.

nobody our their in But oil-directed of needs. And transportation behavior, of a it's in over who do just given an producer shutting are, customers and obviously, negative also basin is they good Waha planning prices. terms job

We're has And basin. going of so not an much from now. everyone seeing impact out on Waha right what's the egress of at really

in We clearly, are demonstrating for the excited there's because, need that the market though on to capacity. half that is a Matterhorn bring second

One. question of with comes Wade the line Our Suki from Capital next

compared if might be I'm market of you mind. sort able might what the on if just you those contrast M&A to don't seeing wondering opportunities rank inorganic how maybe you're comment organic, and in to

of And that that but private going to in anything in we're Well, in that you're the uses have, a capital the somewhat exactly it expectations does think find couple doing talked do there's including favorably quite sure Louisiana. hands moderated we that to permanent things years, have few market it Dilanka assets the I other to competes seller the that last talking what that disciplined has need in about homes. all over very of M&A about, with remain make

flow see So going always the disciplined. in you're us remain discussions, very those while to we're of

of commercial you today ago, contrast pipeline year might kind maybe sort in about could a thinking versus just what prospects And you months terms seeing X been activity seeing Louisiana, in what it. have Got of you're of ago?

Sure, that I'll take one.

lot are industrial facing facilities the of the of region demand comes that pull A Global's gas, we online. dynamic as think Plaquemines Venture LNG I particularly in the facility driver are continue. of seeing the

capacity knew tangentially that of recontracting to real, relatively more for the happen, projects these would our was is lot ability in becoming I us So A market. bring, but people that materialize. demand it's kind as quickly, and we've difference to of the are to this seen going seeing people say of the the

projects kind with that I several terms the dynamic area with have we the coming really think changing other pursuing. And participants projects well for mentioned And there, bodes of that, we as future together I that for to earlier, us. in are

of that speak last to Fantastic more signs question. the to extent One if Are or all more, in off you slowdown kind seeing bit, it you your among may here, a macro a I of squeeze it? customers, dovetailing industrial a of softening any can

No, we not are seeing that.

[ expansions one With plants, the ammonia really In of incentives announced, tonnes all that blue particularly off. of to is side. ammonia these X is being the the the about which of kind on are play of Recall indiscernible] kind some train, MMBtu fact, taking kind train. XXX,XXX there at sector currently, are of of that million day world-class ammonia per is about XXX,XXX per gas ammonia

many are our around portfolio So discussed being assets. around River [ the ],

kind incremental So to in that demand demand area. of robust -- to there that exists that's in addition the already creating the

balance add component. from natural really that for increasing the to that power are gas demand flexibility, gas coming volatility, LNG the With along One reason to together the thing demand storage, is out. you storage storage, The is plants meet grow. I'll that need that price with another to operational

So located I think, that Silenky demand again, storage very crucially our storage, ] our market [indiscernible] our to [ absorb as are well. Napoleonville storage,

are transport bid. that we about excited in the to So in addition opportunity storage very

Fantastic.

line Harry Mateer of question with next comes Barclays. Our from the

of have that's and you ways agencies. the now bit tranches a target, debt, on leverage of that tenure? sheet, have in Does sheet, below terms whether at or you're X do different X you I could to acknowledging change balance coupons balance ratings anything for optimize follow-up but the your you IG a

balance preferreds, And you replacing I narrative cause when or further to debt the maybe guess, look senior rates some trajectory reconsider of those the do related, recently does down the you about year you with capacity? maybe this since shifting at have sheet paying

there. of of place base mean, rates at I that debt lower time Lots were are than a significantly it most when the was structure good Ben. they I unpack the in put on think news It's is today.

to the low-cost recent, investment while grade a structure so is in we place. upgrade debt very had already And

opportunities the debt are to existing many so think And within structure. there that that don't optimize I

them current frankly, using Now, do us plans reduced the because having including bit the anything free we to side, on very gotten the on have, we upgrade to as bit of clear, on And rating. to increasing unitholder. Don't keeping to surprised get not committed that, BBB minus capacity we would, that preferred I flow to particularly have that that be capital to which, this leverage can you have that by preferreds, retaining point, goal. we're it's deal see do BBB in below to a we preferreds, at the think maybe want to little still say, do preferreds, the continue bigger -- the excess we to leverage no minus, from when with little to our easy just with think opportunistically don't hasn't the focus opportunistically, in be value but of better we par, lately anything do. common been that general, that -- cash But returning the be

are closing you. no over further like Thank time. for to comments. to Jessie There this back I'd questions pass the floor at

this for call Thank being morning, you, Alicia, for facilitating thanks, our the call. on and everyone,

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

This today's concludes teleconference.

You may disconnect this your time. for you at lines participation. your Thank