EnLink Midstream Reports First Quarter 2023 Results

DALLAS, May 2, 2023 /PRNewswire/ -- EnLink Midstream, LLC (NYSE: ENLC) (EnLink) reported financial results for the first quarter of 2023.

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Highlights

• Reported net income of $94.2 million and net cash provided by operating activities of $272.1 million for the first quarter of 2023.
• Generated adjusted EBITDA, net to EnLink, of $323.7 million for the first quarter of 2023. The lingering impact from severe winter weather throughout Texas and Oklahoma, along with unscheduled downtime after an earthquake in the Permian, late in the fourth quarter of 2022 adversely impacted first quarter of 2023 adjusted EBITDA by approximately $6 million.
• Grew first quarter of 2023 adjusted EBITDA 6% compared to the first quarter of 2022.
• Repurchased approximately $50 million of common units in the first quarter of 2023. EnLink is on pace to complete the 2023 unit repurchase authorization of $200 million.1
• Subsequent to the quarter, EnLink completed a $300 million tack-on offering to the 2030 notes. Taken together with the $400 million interest rate swap executed in January, these financing activities reduce EnLink's exposure to interest rate fluctuations and increase available liquidity.

"EnLink's momentum from 2022 is carrying through into 2023, resulting in a solid first quarter marked by strong activity across each of our segments," EnLink Chief Executive Officer Jesse Arenivas said. "We continue to see solid activity across each of our systems, and we remain well positioned to achieve the midpoint of our adjusted EBITDA guidance, driven by our largest segment, the Permian.

"The growth in our gathering and processing platforms helps drive our Louisiana business, including our Carbon Solutions segment. EnLink has a clear line of sight to succeed through the energy transition by capitalizing on our existing Louisiana pipeline network and expertise to become the CO2 transporter of choice in the state. We expect to announce more carbon transportation commercial success in 2023 and beyond, as we see the state's business development spurred by its support for innovative climate reduction strategies like carbon capture and sequestration."

Adjusted EBITDA and FCFAD used in this press release are non-GAAP measures and are explained in greater detail under "Non-GAAP Financial Information" below.

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1 Includes $23.2 million of common units repurchased from GIP pursuant to our Unit Repurchase Agreement, which settled on May 1, 2023.

First Quarter 2023 Financial Results and Highlights

$MM, unless noted	First Quarter 2023	Fourth Quarter 2022	First Quarter 2022
Net Income (1)	94	194	66
Adjusted EBITDA, net to EnLink	324	337	304
Net Cash Provided by Operating Activities	272	223	308
Capex, net to EnLink, Plant Relocation Costs, & Investment Contributions	157	137	66
Free Cash Flow After Distributions	6	55	105
Debt to Adjusted EBITDA, net to EnLink (2)	3.4x	3.4x	3.8x
Common Units Outstanding (3)	465,989,285	470,636,443	483,011,794

(1) Net income is before non-controlling interest.

(2) Calculated according to credit facility leverage covenant.

(3) Outstanding common units as of April 27, 2023, February 8, 2023, and April 28, 2022, respectively.

First Quarter 2023 Segment Updates

Permian Basin:

• Segment profit for the first quarter of 2023 was $96.0 million. Segment profit included $0.4 million of operating expenses related to plant relocation and $6.3 million of unrealized derivative gains. * Excluding plant relocation operating expenses and unrealized derivative activity, segment profit in the first quarter of 2023 decreased approximately 10% sequentially but grew 3% over the first quarter of 2022. First quarter of 2023 results were adversely impacted by approximately $4 million due to lingering impact of severe weather and an earthquake in the fourth quarter of 2022.
• Average natural gas gathering volumes for the first quarter of 2023 were approximately 6% higher compared to the fourth quarter of 2022 and approximately 25% higher compared to the first quarter of 2022.
• Average natural gas processing volumes for the first quarter of 2023 were approximately 6% higher compared to the prior quarter and 24% higher compared to the first quarter of 2022. EnLink continues to benefit from strong producer drilling and completions activity.
• Average crude gathering volumes for the first quarter of 2023 were approximately 1% higher compared to the fourth quarter of 2022 but were approximately 5% lower compared to the first quarter of 2022.

Louisiana:

• Segment profit for the first quarter of 2023 was $96.4 million, including unrealized derivative losses of $9.0 million. Excluding unrealized derivative activity, segment profit in the first quarter of 2023 grew approximately 5% sequentially and 10% over the first quarter of 2022.
• Average natural gas transportation volumes for the first quarter of 2023 were approximately 14% lower compared to the fourth quarter of 2022 but were approximately 8% higher compared to the first quarter of 2022.
• Natural gas liquids (NGL) fractionation volumes for the first quarter of 2023 were approximately 4% lower compared to both the fourth quarter of 2022 and the first quarter of 2022.

Oklahoma:

• Segment profit for the first quarter of 2023 was $94.7 million, including unrealized derivative losses of $1.4 million. Excluding plant relocation expenses and unrealized derivative activity, segment profit in the first quarter of 2023 decreased approximately 7% sequentially but grew 1% over the first quarter of 2022. First quarter of 2023 results were adversely impacted by approximately $2 million due to lingering impact of severe weather in the fourth quarter of 2022.
• Average natural gas gathering volumes for the first quarter of 2023 were approximately 10% higher compared to the fourth quarter of 2022 and approximately 18% higher compared to first quarter of 2022.
• Average natural gas processing volumes for the first quarter of 2023 were approximately 7% higher compared to the fourth quarter of 2022 and approximately 13% higher compared to first quarter of 2022.
• Average crude gathering volumes during the first quarter of 2023 were approximately 4% lower compared to the fourth quarter of 2022 but were approximately 14% higher compared to the first quarter of 2022.
• Based on producer plans, EnLink still anticipates double-digit gathered volume growth in Oklahoma in 2023.

North Texas:

• Segment profit for the first quarter of 2023 was $76.1 million, including unrealized derivative gains of $2.7 million. Excluding unrealized derivative activity, segment profit in the first quarter of 2023 decreased approximately 3% sequentially but grew 23% over the first quarter of 2022.
• Average natural gas gathering and transportation volumes for the first quarter of 2023 were approximately 5% lower compared to the fourth quarter of 2022 but were approximately 19% higher compared to the first quarter of 2022.
• Average natural gas processing volumes for the first quarter of 2023 were approximately 3% lower compared to the fourth quarter of 2022 but were approximately 21% higher compared to the first quarter of 2022.
• The previously announced CO2 capture project with BKV Corp. is progressing ahead of schedule with an in-service date expected early in the fourth quarter of 2023.

First Quarter 2023 Webcast Details

EnLink will host a webcast and conference call to discuss first quarter 2023 results on May 3, 2023, at 8 a.m. Central time. The conference call will be broadcast via an internet webcast, which can be accessed on the Investors page of EnLink's website at investors.enlink.com. Interested parties can access an archived replay of the webcast on EnLink's website for at least 90 days following the event.

About the EnLink Midstream Companies

Headquartered in Dallas, EnLink Midstream (NYSE: ENLC) provides integrated midstream infrastructure services for natural gas, crude oil, condensate, and NGLs, as well as CO2 transportation for carbon capture and sequestration (CCS). Our large-scale, cash-flow-generating asset platforms are in premier production basins and core demand centers, including the Permian Basin, Louisiana, Oklahoma, and North Texas. EnLink is focused on maintaining the financial flexibility and operational excellence that enables us to strategically grow and create sustainable value. Visit www.enlink.com to learn how EnLink connects energy to life.

Non-GAAP Financial Information
This press release contains non-generally accepted accounting principles financial measures that we refer to as adjusted EBITDA and free cash flow after distributions (FCFAD).

We define adjusted EBITDA as net income (loss) plus (less) interest expense, net of interest income; depreciation and amortization; impairments; (income) loss from unconsolidated affiliate investments; distributions from unconsolidated affiliate investments; (gain) loss on disposition of assets; (gain) loss on extinguishment of debt; unit-based compensation; income tax expense (benefit); unrealized (gain) loss on commodity derivatives; costs associated with the relocation of processing facilities; accretion expense associated with asset retirement obligations; transaction costs; non-cash expense related to changes in the fair value of contingent consideration; (non-cash rent); and (non-controlling interest share of adjusted EBITDA from joint ventures).

We define free cash flow after distributions as adjusted EBITDA, net to ENLC, plus (less) (growth and maintenance capital expenditures, excluding capital expenditures that were contributed by other entities and relate to the non-controlling interest share of our consolidated entities); (interest expense, net of interest income); (distributions declared on common units); (accrued cash distributions on Series B Preferred Units and Series C Preferred Units paid or expected to be paid); (payment to redeem mandatorily redeemable non-controlling interest); (costs associated with the relocation of processing facilities); non-cash interest (income)/expense; (contributions to investment in unconsolidated affiliates); (payments to terminate interest rate swaps); (current income taxes); and proceeds from the sale of equipment and land.

EnLink believes these measures are useful to investors because they may provide users of this financial information with meaningful comparisons between current results and previously-reported results and a meaningful measure of the company's cash flow after it has satisfied the capital and related requirements of its operations. In addition, adjusted EBITDA is used as a metric in our short-term incentive program for compensating employees and in our performance awards for executives.

Adjusted EBITDA and free cash flow after distributions, as defined above, are not measures of financial performance or liquidity under GAAP. They should not be considered in isolation or as an indicator of EnLink's performance. Furthermore, they should not be seen as a substitute for metrics prepared in accordance with GAAP. Reconciliations of these measures to their most directly comparable GAAP measures are included in the following tables. See ENLC's filings with the Securities and Exchange Commission for more information.

Other definitions and explanations of terms used in this press release:

Segment profit (loss) is defined as revenues, less cost of sales (exclusive of operating expenses and depreciation and amortization), less operating expenses. Segment profit (loss) includes non-cash compensation expenses reflected in operating expenses. See "Item 8. Financial Statements and Supplementary Data - Note 15 - Segment Information" in ENLC's Annual Report on Form 10-K for the year ended December 31, 2022, and, when available, "Item 1. Financial Statements - Note 14—Segment Information" in ENLC's Quarterly Report on Form 10-Q for the three months ended March 31, 2023, for further information about segment profit (loss).

The Ascension JV is a joint venture between a subsidiary of EnLink and a subsidiary of Marathon Petroleum Corporation in which EnLink owns a 50% interest and Marathon Petroleum Corporation owns a 50% interest. The Ascension JV, which began operations in April 2017, owns an NGL pipeline that connects EnLink's Riverside fractionator to Marathon Petroleum Corporation's Garyville refinery.

The Delaware Basin JV is a joint venture between EnLink and an affiliate of NGP Natural Resources XI, L.P. ("NGP") in which EnLink owns a 50.1% interest and NGP owns a 49.9% interest. The Delaware Basin JV, which was formed in August 2016, owns the Lobo processing facilities and the Tiger processing plant located in the Delaware Basin in Texas.