ENBL - Earnings call transcript Q2 2019 | Enable Midstream Partners, LP

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Operator

Good day, and welcome to the Enable Midstream Partners Second Quarter 2019 Earnings Conference Call and Webcast. All participants will be in a listen-only mode. [Operator Instructions] After today’s presentation, there will be an opportunity to ask questions. [Operator Instructions] Please also note this event is being recorded.

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

Matt Beasley

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

other questions. in have We management of to your today team also answer the members room the

we earnings press morning, Form filed release our SEC. the with issued this and our Earlier XX-Q

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

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

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

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

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

Rod Sailor

of compared Thanks the thank operational joining call. today's and on across solid you measures by had Matt. another financial when and us Enable quarter, quarter key for second highlighted morning last Good year. growth to

saw volumes. gas oil gas processed and For growth volumes, in operational transported gathered measures crude natural and condensate Enable natural volumes, gas natural gathered volumes

were highest Basin. by volumes quarterly Williston the volumes we which gathered in condensate acquisition Velocity the driven and and were reported, oil primarily crude continued Our the have growth

adjusted For cash flow, financial distributable and EBITDA, coverage. income, measures, grew distribution net Enable

the of a $X.XX for times basis. on expansion distributions X.XX distribution the increase X%, second the distribution, funded ratio in unit coverage first After units of to one-time approximately declared the which a a quarter's on capital common annualized quarter, XX% LP spending for Board over $X.XXXX distribution Our our of quarter. the rate of our increase, our of equates an compared to representing distribution increase

intend that increase distribution not the But In on I night the highlight I in on finance capital common do, portion Enable to any to ownership more believe and its cover cash filed does plans a which hold to want units units. common to this on indicates before we XXD slide. expenditure with overhang utilize the plan of to reduce and it I distributions CenterPoint Schedule last next removes CenterPoint amended program, its filing, unit SEC. currently Enable its the the

supporters on we to of CenterPoint representation and through direction. and forward Enable their strong Enable's look strategic OG&E support continued sponsors' have Board been strategy our

the quarter's drivers highlights key increase. the slide for distribution next The

see over cash we since period. As you growing coverage distributable XXXX, can have the each distribution and year performance achieved strong flow both

I objectives. our growing performance am or while very to maintaining of unitholders stable track LP record our our distributions and financial proud of

portion increased its completion Enable significant the a XXXX, projects Specifically coverage has its since and new key of in expansion which distribution of capital areas. program, acquisitions self-funded included has and

distribution strong X.XX we right of distribution achieves return Given performance, of our to this is through the Enable's a now cash XXXX times. times X.X are Enable we to quarter the target increase X.XX outlook for With Enable coverage increase, the time to reaffirming distribution and increase. financial for coverage believe investors still

that Enable's with gathering to XX our on activity Gathering Processing connected currently be Enable's expected to next continues producer rigs significant highlights the are to Turning and slide. systems. wells Processing Gathering serve to and segment drilling

of from over SCOOP a our XX% gathering STACK market leader the where wells Enable expect in plays remains in these connect plays. rigs systems active and to we to the

to While efficiencies. improve quarter, we compared have last a seen reduction rig to activity continued in producers

XXXX. the of operators STACK drill between SCOOP quarters first by the an of reduced the and STACK According of days to average to number Drillinginfo, XX% in required a and have and second SCOOP well

asset in increases scale In to condensate benefited acquisition volumes which to volumes In access benefit the quarter, crude the from the Enable market in offload through and shift SCOOP. a parts provides market Basin to the activity Basin, provide position Velocity and continues and Enable quarter creative Ark-La-Tex a further in the second saw rig Anadarko gathered short-term and leveraged producer oilier the oil to solutions its in Enable and the its agreement, the demonstrates customers. of

the quarter Williston online Enable grow year. the continues to during volumes this new by expect as crude to by to the In later be XTO that record infrastructure Basin, drilling natural third-party driven due oil comes in infrastructure we gathered alleviated basin and the duct activity continued gas constraints saw count

capacity Turning contract next extending to day the Cooperative Arkansas EGT or dekatherms day. We day contracted over our for transportation during on per a transportation per the a with XXX,XXX of with including contract Electric per and slide. extending long-term dekatherms and storage quarter, XX,XXX Illinois Corporation extended dekatherms for MRT XXX,XXX segment Ameren

CERC Corporation regulatory and for precedent CenterPoint's agreements volume needs conditions for which EGT's XXXX. required reflect or Resources that outlining EGT approvals contracts terms and and March pipeline expire extending is serve definitive latest across on preparing the has that currently Energy signed contracts the Enable footprint. received the previously EGT XX, LDCs we CenterPoint CERC long-term

that recently to advance and and for intervenors staff testimony to to rescheduled we FERC. The set we XXXX the received at rate review. been originally FERC from The November date MRT was case has that XXXX early continues hearing continue

appropriately outcome current subject increase of As refund proposed investments billed rate that upon X We customers ensuring being MRT's the historical of remain to depending pipeline's focused to on the costs. January case. is and year of this rates reflect the

Gulf achieved second milestones the project during Pipeline our important quarter. for Run We several

prefiling FERC meetings and public stakeholders during hosted commission process, quarter. the houses of the for public conducted scoping part Enable open As the

for and the project which Enable remains now in filing with we do XXXX. expect formal additional a prior finalizing of certificate in active customers scope discussions the of to anticipates commitments early to the capacity application,

to like I note to would John, a key turning the few Before takeaways. call over

commitment value discipline. and Our midstream of financial to highlights the performance our our platform integrated

existing and leverage reach of our commercial creative strategy solutions to chain. value the our continue remain deliver footprint, on we midstream focused our We across extending

track in this record success of increase today's that pleased very am resulted has distribution announcement. I

turn now will financial second John over and results. the further to I our quarter XXXX operational to discuss call

John Laws

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

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

to Turning XXXX. to in our slide well quarter second drove the in segment Basin and growth results activity and Processing Anadarko customer X, the of compared volume Gathering

gathered in in total the increase second can gas a gas XXXX total we X% to compared you processed see, volumes As and X% had year. a in natural the volumes increase of prior natural quarter

condensate Basin for Williston well increase Transportation substantial a of same EGT a Basin increase XTO. the project. on gathered over increase Storage second In transported acquisition recent oil period XX% to in year continued new as case was ago segment, by our including from was volumes the our as the crude a in compared XX% and drilling in quarter as result in contracted The by our Anadarko the our and primarily of a result a volumes EGT's capacity volumes year activity prior gathered volumes oil crude driven

on the financial Moving on next our slide. to results

costs XXXX. in increased gross condensate due for driven adjusted higher decrease increase volumes, margin gas the amount by in the by effects in and the adjusted processed a The and items overhead and crude EBITDA volumes a O&M as by additional higher and for to capitalized of service. partially non-cash higher of to due of higher compared payroll-related offset natural an second cost Our assets cost, in an EBITDA which result adjusting insurance were and after increase G&A to XX% placed was of when gathered quarter oil higher XXXX

adjusted EBITDA, year expense driven cash XXXX. interest partially increase XX% prior when for higher quarter the flow debt increased higher second associated the Distributable balances compared offset by and by outstanding primarily to The was with higher rates. by interest higher of adjusted

measures which and losses to by primarily in of and unrealized quarter compared our XXXX second the gross XXXX effect realized for of net income increase on activity. The gains includes margin, were the derivative driven higher our

Enable's activity $XX loss activity higher slightly $XX on resulting partially quarter depreciation gross margin quarter offset XXXX in of second gain expenses, $XX a derivative margin million in increase by derivative second and to higher million. increase million a The margin of expense, higher the the gross an XXXX for for was in interest on O&M included amortization expense. compared gross and

in primarily and service, new and higher placed The results Velocity associated acquisition, additional amortization a of depreciation with depreciation assets study. expense the was

a debt our generated than sheet considering XX% the for of EBITDA including financed expansion four of the capital, with metric distribution maintaining substantial quarter our while quarter second distribution of distributions After balance increase and over which times. times liquidity declared significant strong X.XX the Enable less to coverage

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

of As be end derivative fourth commodity we units. common the periods, to net gain during a anticipate decreases income significant activity resulted on on the in a result in attributable at hedges range future of we quarter quarter be XXXX of that for currently in price outlook settled to that will that our lower XXXX

turn now his call back Rod the I to marks. final over will for

Rod Sailor

a is the company for built that Enable John. strong Thanks is long-term.

scale critical markets. midstream in link fully a large integrated growing production is between platform Our downstream

be margin fee-based for XX% the fee-based hedged. or and primarily contracts to balance of of are Our approximately year we the gross expect

have midpoint strong our with XX% XXXX achieved growth range. of We XXXX the business over in from adjusted performance outlook to EBITDA

we sheet balance significant expansions. investment-grade have Our to is strong available liquidity fund and future

record track partner. highlights next The slide a our and responsible operator community as

our designing, operating to constructing, assets and committed on are We regulatory with focus stewardship and compliance. a environmental

in gas member, storage commit with improving and and methane others a practices from to continuously INGAA emissions have prudent interstate in minimize environmentally we responsible to an manner. natural industry joined As operations to transmission the

Wetumka of capital a We our after have at of facilities since built at to reductions member EPA's the through new these STAR each learned XXXX, facility Natural of processing XXXX. process voluntary investments been applied and emissions and our improvements lessons a plant methane program combination the Gas have voluntary we achieving

for We Prairie programs beetle. Chicken have burying the including participated and conservation in programs Lesser species American the

to five Enable years, costs, the has that right-of-way habitats. biodiversity Over reduces wildlife beneficial a right-of-way maintenance maintenance method piloted and pollinator new maintenance improving and access promoting past while

Arkansas Game efforts, these Award. Wildlife presented Wild Award of Enable and awarded Fish Corporate with and Enable Achievement Turkey the recognition In Partnership Energy Conservation its for Commission National its National Federation the

through charitable year provides a employee volunteer volunteer also to we employees hours activities. live across our employee and each up and supporter further is in to communities the strong active donations that per time-off encourages be in Enable communities for footprint XX paid of of Enable to both work time. financial and

United Way Enable In communities. and proud United XX,XXX pledged hours Enable local XXXX, our Way across of supporter employees to is company's agencies Enable serving over Way its employees campaign. recent United a the most the $XXX,XXX and during footprint spent

with have are We to Partner and Safety also Thunder basketball honored Oklahoma the through responders partnered the XXXX build emergency we courts Enable's Oklahoma in Program. communities in City

In continue remain to work closing, we day long-term sustainable better make Enable stronger creation. a to committed to and we value company, every

the will for and remarks, I my now concludes That questions. open call up your

Operator

you. Thank

will session. first And begin JPMorgan. Instructions] Tonet Jeremy [Operator ahead. We of the comes our now Please question-and-answer go question from

Jeremy Tonet

Hi. Good morning.

Rod Sailor

Good morning, Jeremy.

you fallen up up the the a producer Just how neck have like bit, in rigs of there. your the wanted but It with circle efficiencies woods? improved shaping to seems activity see

versus might with is trajectory or trajectory in going if do of far as you how end any still expectations? any look thoughts the XXXX, forward so this your in comfortable to volumes how there, And see as there? things changes you're year And Just that want see line kind your guidance? of

Rod Sailor

thanks question. Well, for Jeremy, your

his reaffirmed guidance, but call know, on to see of continue XXXX our As any We've you we mentioned a given our the but activity section clearly in footprint. prices, as seen haven't along still XXXX we pullback guidance. we John

able pullback to this as footprint, expect the think that stream. oily acquisition to And continuing sure pick commodity is Midstream, producers the in specifically gas valuable we SCOOP prices last areas in you up made be of that target we wanted we we of the what our to were across about piece area. our Velocity that reasons because one you to as was know, more see year Anadarko, with the It

made here. we business our the So comfortable we're still distribution the stand not around – if we the of would again, have with decision as position weren't we

Jeremy Tonet

far role the as was is Great. repurchases I And turning returning there consideration Given wondering distribution as part future that then far quite was on wondering of it just Thanks is if yield as any a that. as the high there. for right just capital? repurchases unit play now, increase in here? unit towards ENBL as could mix as the

Rod Sailor

I we distribution look is that in We distribution the flat keep made an decision or look should our a -- really options or at our capital. question, not at the at since all announced when to we make distribution we use we raised that other we increase that ways of to have make feel our this point step in the the but time since is first whether increase go XXXX again this morning. that appreciate

that's anyway, continue to stand evaluate future options we So our as where other we for we'll plans capital. develop

Jeremy Tonet

That's all for taking me. for question. my Thanks

Rod Sailor

Thanks, Jeremy.

Operator

next question go comes from Please Shneur Our of UBS. Gershuni ahead.

Shneur Gershuni

ask kind production it a see guys. as pickup to going to to of profile, in guess, got you've up. now is XX%, rig differently, but a a of Hi. I'm question it. Good offset drop again, with but the the ask I do different count count, morning got Is you've Maybe the year maybe in to call the down bend is question. question efficiencies efficiency a respect to it Jeremy's from With there today? inventory that enough drilled same uncompleted the an rig little effectively you

Rod Sailor

really continue business, we We're XXXX. We'll drilling. of Again, We shift see as or going November could with The our our trajectory the what guidance pad November a on like bell. be do work towards call. call that feel more XXXX. so we're very through so be oily to talk basin, there give to is typically to to the used areas. about comfortable a further more on can't I'll SCOOP We mature ring more that continue XXXX, that we

in we I here think, didn't not we expect the we have factored would So, how lightly. distribution increase, that increase to as we made thought We stand again, it, our business make about perform. we

And of very the and with so, Enable again Midstream. comfortable the direction performance

Shneur Gershuni

tree of since XXXX And actually to tree decision capital, do us And and I through return so itself? you that I distribution forth. on -- to or XX% this payments? than overwhelming higher does And it unit so is consider can increased you get map are walk Okay. if make on is it, partner more basis, forward? general just your buybacks Fair on a decision us you about you point, consider would just more hadn't to Jeremy's the do walk enough. sense going mean, appreciate the kind that wondering IDR buyback? of the CapEx, cash go-forward with prefer respect but was to can the you the and you through or flows buyback unit I

John Laws

done around number sheet, we continue to to and we've comments wouldn't respect I the your flow, to historical which been where do. about have increases point that financial business primarily end coverage, as we think sit. has point given to objectives, to think we distributable we John. is with this necessarily Overall, investment-grade driven just the the Shneur, has continued the latter over general last the respect trajectory to our the to in I it with balance an cash on the partner which strong but years of maintaining of on been distribution expect IDRs,

We shareholders haven't that this that. felt good to was a time some increased to time return for the and do

to in relates how as analysis to light to perform in same on would ability looking go-forward and business, basis, those. current to we similar So confident relative for that our expectations of it our longer-term the be objectives in policy, a the at maintain fairly expect being decision distribution terms set of tree our of financial

go primarily the ENBL, when it in large, those is think that transaction have line we But occurred of something occurred. level back the although other Ark the increased that lines, necessarily path large of think along consider not this which some or don't and we that's the right unitholder are today. year has think buybacks about forward we us I buybacks float transactions with for

Shneur Gershuni

of checkmark -- right? final Is and trying a leverage, question a little sort tick got forth. kind so off don't structure of remove coverage, kind one you've discussion think of I piece have the to may, if that are to got general further? trying You've boxes got lower metrics of simplify I you've unicorn when any I you in is funding you really equity lot One and the the the the the of about to one about the IDRs fact IDRs. bit the there that there mean, sort the the

Rod Sailor

Well we here stands have I we're what I IDRs as the not said think want in it always and to reiterate, today.

here to fairly our is that its business. that has to as very needs direction something issue we our always with would as to an we we said, we would Enable of to relates as Board view maintain at be consistently been goal it what conversations competitive Enable extent that can of the in have our supportive as and cost engage the think capital IDRs the in Board do I strategic

Shneur Gershuni

saying, If are I in is the IDRs becomes it you there with can no issue? clarify so point an until dealing

Rod Sailor

Yes.

Shneur Gershuni

Have All you very much right. a great day. guys. Thank

Rod Sailor

you. Thank

Operator

Moreen of question Mizuho. from next Our ahead. Gabe Please go comes

Gabe Moreen

Good morning.

Just had of a couple questions.

down things, side are ones of renewals of pricing T&S both as you've achieved of in behind terms to broaden speak kind contract the pending ones are just these flat? that up On some largely well these the as can you the

Craig Harris

I Craig is Gabe Harris. -- in think this look it you at total if

certain it's I it's customers environment, competitive had -- It's them think be sit look them a are total in system and generally relatively of some you at flat. largely if bag mixed more I on some it'd within kind based but where increases of flat. so think the

Gabe Moreen

today? talk and about are nat of as clearly in to but light gas NGL in some out your where nat markets a XXXX markets they hedging, peers hedging than gas exposure approach less can to just and hedging then And NGL pertains you've bit got Great. there, you it

John Laws

is sure. John. Gabe this Yes, Thanks,

that look respect next which really not some to with we been been commodity been quite current not years now we're approach and into between year that we're at somewhere the what XX%. as as we past. the this where of some we've and and as most the ahead is it's been closely Our XX of in at have peers with year has XXXX doing XX% We've and looking been of forward months are to the pricing Certainly it's there, dynamics. at aggressive stepping looking target

marks, we're forward plus to stronger market, the realizing side. based way up quarter, a which in what plus realizing and gas seeing show quarters that in cash on Just markets, bit the seeing are we're a the the actually particularly little be two on tends the

So been into appropriate bit looking again we to our hedges have continue slower little at next XX but to think as a that hedging, we months. we move

Gabe Moreen

Thanks, John. a question last little And is from broader. me,

have Some their producer monetizing and process of started delivery customers of disposal of your their water systems. or some in

Velocity, Is in? made that's doing you'd I a service, kind to something ever be you know step offering of big with there in the obviously all out, sort SCOOP. of interested

generally just and So speaking into water that your business? getting thoughts on

Rod Sailor

that, of so of to already an we're continued a it and evaluate, some evaluate. makes Yeah. Bakken. line I that continue that have look as the the If business. to we line at water But And in sense. that do that's mean -- businesses something that look area is business We is move water and potential we a do. to want we in to at, liquid gas

Gabe Moreen

Rod. Okay, thanks, everyone. Thanks

John Laws

you. Thank

Operator

Please of from Colton Tudor, Pickering, ahead. Bean go Our comes Holt. next question

Colton Bean

morning. Good

oily more So terms an focus. the of of commentary, pivoting to I appreciate producers just in

is relates changes year? the any Ark-La-Tex the the back that activity system? in half there, counterparties of for levels your with Have of terms discussions you to So, seen in

Rod Sailor

in volume We No. back XXXX. to we half And continue see of haven't. really growth, the

Colton Bean

expectations been so and rig and near-term to the far steady the no has then? least looks then, like real at Yeah it thus fairly Got it count

Rod Sailor

That's correct.

Colton Bean

forward? increase. I as distribution Got going a of But it, asked read think terms to spend it And a the it and distribution we on spend relates at means here? that of then, increasing capital XXXX, capital it's lower been maybe all should number And into in ways. different in

Rod Sailor

wouldn't read going increase. distribution as forward, capital it the spend No. I to relates to anything, related

thought projects distribution the perform increase. some As continued online, we we to now for businesses was well. time We brought the said, very

-- really capital really, it So line that. needs. a draw I future any wouldn't between And

Colton Bean

That's helpful. I appreciate it.

Operator

ahead. Markets. Our comes next TJ go Please Schultz from RBC of Capital question

TJ Schultz

Just coverage, or uncertainty Hi. distribution Good of morning. appropriate business given some your for just on feel longer term? changes do activity? What the the you is rig

John Laws

a to mentioned, coverage continue sheet around one set the of that target we'll TJ from hey, is question. guided financial ensuring respect to our earlier, as go-forward a I with standpoint that the to with around, and policy, our this XXXX. is two think distribution All And Good respect determinants we is about we'd past John. investment-grade, Yeah. to that the and questions we've coverage out maintain little leverage. as bit the balance objectives in both primary of that,

TJ Schultz

the one Fair you're the the the hearing You Okay. to the case, or can some anything I enough. rate occur early just step event, moved? XXXX that? next what's reviewing And there? mentioned next Is into more was MRT, think testimony. that prior

Rod Sailor

be in would just -- continue to say I with our customers. we're Well, discussions we settlement that,

forward. So those to move we're hoping

TJ Schultz

Okay, got it. Thanks.

Rod Sailor

Thanks.

Operator

next Instructions] go Fargo. Ned from Baramov Please Wells Our question ahead. of [Operator comes

Ned Baramov

and Good taking the thanks question. morning for

offloading you additional I there opportunities? can noted short-term agreements? talk some And such Maybe Ark-La-Tex. the think, of opportunities term average what's you about in are these gas

Rod Sailor

We just advantage have our the lot significant our operate. given was number we the to the And seeing Anadarko. -- came some one customers' This seen scale we is the nature. We're gas, historically of the system the ability to the in scale. lot that take about move that short-term bear opportunities Again, in a in Haynesville. of very of other a one gas. in areas reach a of a to producer talk that to were we to able provide was have things That move a and trying

So to depends and really on have opportunities the whether capacity. think there those it will I continue yes, out we and be

to is close system but Haynesville at full moment, Our extent find we the those. to the can

or to opportunity. We a are continuing pass again and not We want opportunity to tried that to short-term. be itself talk creative customers. for on customers always was think both commercial but may did to to short-term may continuing in find area, has that. I This long-term our folks that finding able Enable not solutions look,

Ned Baramov

it. a switching the of Could little longer Gulf gears some than why provide color Got bit And final then is scope to maybe the as anticipated? announcement to you Run. originally taking

Rod Sailor

I sure to stated really make hasn't is our date it all. want that thing one I moved any in-service at the Again

to to We impact in-service have a in system our only those time built try related to we -- to important the lot given date relates really in. onto to have our out. ability to date, and discussions to we the so continuing system, front-end why with our pipeline. we've about It size of that our that to of just efforts expand -- discussions coming it It's continue customers doesn't felt that it and moved strictly size that increase continue have that's of it

Ned Baramov

Got all That’s it. I had. you. Thank

Rod Sailor

Thanks.

Operator

question of go Capital. next comes Our from Please ahead. BMO Danilo Juvane

Danilo Juvane

question differently a bit distribution. the to good wanted morning. little be may you, Shneur's ask and on I Thank

in today it that Just forward? here. but now -- we that confidence obviously, strength the that your not of necessarily about and increased and you've that sustainability distribution given but how out you you've I business, in faith underscores forward Obviously, of going should of guidance, terms know think right have going

Rod Sailor

maintain that that distribution. when pride if We covenant we in taken make have great the distribution -- making announcement, continue need always we're fact we've to you to a we look, like,

not distribution So, take not We distribution lightly. increases lightly. take we our did do

Danilo Juvane

from really much. you Thank That’s so me. it. Got

Rod Sailor

Thank you.

Operator

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

Rod Sailor

the Enable. a safe and of have thanks for on I their Well, call day. everybody want for your on interest and our In to employees hard closing, again, recognize work just in please all dedication the everybody call, to

Operator

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

disconnect. now may You

Enable Midstream Partners (ENBL) 6 Aug 192019 Q2 Earnings call transcript