- Earnings call transcript Q3 2022

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Operator

Good morning, and welcome to the EnLink Midstream, Third Quarter 2022 Earnings Call. All participants will be in listen-only mode. [Operator Instructions]. Please note, this event is being recorded. I would now like to turn the conference over to Brian Brungardt, Investor Relations Director for EnLink Midstream. ahead. go Please

Brian Brungardt

replay presentation. www.enlink.com. Vice our include good be predictions undertake revise. Financial from of today's a of to by and materials and no Arenivas. the closed today turn differ the like our website on including the over then Jesse filings, this disclosures A Pablo, Welcome EnLink's and release Vice factors certain remainder after that Lamb, speak to remarks Jesse and Definitions these the call including be available This I made update presentation Operating now statements in as Thank and with Mercado, press a Actual to also Jesse, and open We results release, Pablo those earnings of reconciliation morning measures, are and issued in projections encourage obligation also and to well and made questions-and-answers. call. may measures yesterday, are filings. quarter forward-looking available to We Executive Executive under set start of differ Ben only our Officer; XXXX of Chief Risk pertaining We'll and will and cause call you in of Today's markets measures. our and call, would our release and discussion of other review today's of Participating for third Federal press and on those heading actual With found appendix call our The Chief the date SEC Arenivas, presentation our discussion includes Officer; website. prepared a materially as call Chief you or Securities call the President and Ben leave within Executive expectations everyone. forward-looking President we our Officer. to non-GAAP at that, SEC the could release financial press of brief to on the meaning Factors. will results cautionary can are as Laws. earnings of statements call discussion statements, the of comparable the GAAP our the

Jesse Arenivas

Brian, size with cease. time, deal quarterly XX% where building than this you, EnLink’s EBITDA execution which that joining on to results, EBITDA include transportation Thank and set morning, and pace secured over to record, today time discuss unique a want is opportunity ExxonMobil. of EnLink to XXXX to good adjusted joined and by XXX Thank have our record team's exceeded and ago, opportunity EBITDA. everyone. plan. quarterly team us days the driving five our to the our take in and been quarter landmark the is a In little my you both I more that adjusted I execute new this moment another a to third carbon it grow for expectations commitment the ready short adjusted momentum year, on prior highlight are we've areas

the to we of our executing guidance with top growth Last coupled end our quarterly now XXXX. today, of are which range. represents expect million, EBITDA seeing financial is results at EnLink First, EBITDA with the to year-over-year. year record a – outperformance night quarterly we adjusted rate announced $XXX Due robust our we strong year-to-date, in XX% momentum the

strong Second, EnLink is financial position. a in

so half far by a and addressed capital term leverage have this our year proactively structure. We reduced

near We have ample meaningful liquidity and maturities. term no

allocation. capital continue to we Third, balanced execute our

our finding are carbon continue attractive While business, investments our grow we to including solutions we to delever, business.

momentum. building unit capital the of buybacks. execution with our volume We our our of unit We visible holders continued in XXXX is to common increasing return Fourth, see business. G&P in still are growth EnLink

gas NGLs, be for natural well business our are decades in XX% positioned the will We with in which future to high come. of and also demand for

we energy are we building. midstream CCS space opportunity the premier is transition In addition, with the what a in think have I business

we Finally, to carbon transportation the we are seizing the to well transporter joining elaborate be choice on on Louisiana. opportunity COX new to EnLink Prior was to agreements. sequestration and that positioned have capture, point, unparalleled of our in secure EnLink,

solution, miles the approximately larger Louisiana, the coveted effective year. opportunity Mississippi of in in than of per credits which metric to with the is sequestration tons much extensive market. significantly is offer impact. carbon IRA our network emits transportation development timely legislation expand recently is mile by and EnLink's positioned Enhancements area XXQ CCS various our the well only within metric I should year an the a corridor, capture X,XXX most sub even tax cost us $XX last ton, million River highlighted to industrial realize. In to XX the lower estimating that facilities of the million However, accelerate EnLink a in Utilizing of the XX serve mile opportunity COX ratings system. of extremely environmental recent with to in per XX pipe enables and the breakeven’s tons

more agreement, CCS metric agreement able company an has mover Secured Ben transportation, opportunities of the believe announcement, significant been transition our over for front summary, up provide by to sequestration tons of a overview on that, recent significant and definitive I top for the is operations. agreement come service do. COX done no I provider. on of it industrial more a midstream on As with many has Louisiana million a of we with commitments executing significant and shared In executing per provide year. the wide transportation in capacity reserve positioned to in to is are signing Ben this believe first a first to With details With to from existing CCS Pablo will other agreement, emitter for a in which advantage we turn the business. definitive XX growth energy provide ExxonMobil us, our with business. project quality well something high and which EnLink this our I’ll to our a EnLink

Ben Lamb

Thanks, Jesse, everyone. good morning and

Let are saying prices, performance excited commodity me start solid the the momentum in Despite seeing we I am volatility of about segments. in EnLink’s across how off by operations. each our

XXXX. $XXX.X from Now, Phantom in the unrealized derivative of our quarter continued of Permian profit momentum the let's relocation walk assets plant during third through generating the the of million segment million quarter starting quarter approximately gains. the profit million tied where included $X.X of by in to we the $X.X Segment last expenses operating of and

commissioned and higher third $XX.X. Excluding and activity, grew XXXX year gas second natural XX% profit Phantom and the derivative an capacity. meet of additional results To segment approximately third to segment cash the customers. recently million robust processing of X% our XXXX. producer in feet quarter for the the approximately from adds quarter XXX third to we These per day gas which plans the strong flow quarter volumes midland the XX% of basin, we plant, remain gathering relocation volumes compared third activity unrealized Average for compared XX% and Producer processing alongside of OpEx approximately grow of Average XXXX third quarter. to of quarter quarter drove higher quarter higher the cubic both sides positioned the on prior were on side, plant quarter remains impressive the and higher XXXX. the X% compared third well were of approximately X% sequentially natural to sequentially,

of XXXX third to quarter Louisiana, the derivative profit unrealized including million, came $X for million. segment now of Turning $XX at in gains

drove activity, derivative higher XX% million. prior margins, volumes unrealized summertime quarter the third normal from weakness by which profit sequentially cash segment over flow quarter of XXXX $XX.X of segment strong impact NGL year third the were XX% partially and the solid These in of seasonal Excluding benefited in markets. Louisiana and from gas quarter. offset increased results

our although gas fourth results quarter. results, quarter starting conditions were in in typical in seasonality ethane strong NGL favor than are favorable basins. we some market as see Third the aligned, see higher and to a supply a Shifting positive number economics in will of rejection we margins quarter, volumes resulting to particularly

growth with we industrial decision of to system made Venture strong attractive other in front, evaluate recently opportunities, existing leveraging day and to commitment growth, that transportation to LNG an to potential On returns. supported per MMBtu our generate support continue XXX,XXX expansion the to demand gas its the efficient We from incremental execute Calcasieu XXXX, support facility. by Global an LNG infrastructure Pass

and OpEx quarter of approximately million derivative million unrealized $XXX.X up we third the the in $X.X XXXX. expenses excluding for plant approximately relocation the delivered the derivative plant of of $X.X quarter were of prior XXXX. quarter, Moving third us. in the and stable Segment X% profit gains, the activity, of tied Phantom for increased cash to natural X% including of the quarter compared the profit segment relocation operating of Oklahoma, and million profit to Oklahoma third sequentially from year segment flow Average solid quarter. gathering to gas to XXXX approximately the continues third and quarter and volumes X% sequentially deliver X% for higher higher approximately unrealized

this cash on the about the now is next XXXX, During This quarter, in in by confidence Oklahoma. year. double we million an we flow. expect growth part Based the segment our of Last activity volume generated latest digit with seeing we're quarter point third talked segment $XX.X inflection the accelerating in customers, year. conversations driven

end including Wrapping the over million. during to We well profit expect derivative North new connected our $XX.X nearly for connect unrealized XXXX wells with gains producers next the XXX up million, with year of to have wells $X.X segment Texas, XX was plans quarter and year.

Excluding segment acquisition increased activity, sequentially by new XX% sequentially prior quarter, prior of acquisition increased midstream gas quarter increased it to of that the The year July increased volumes XX% compared the of XX% redeployment already Crestwood's investment profit assets, in XX% North on-load outperforming about progressing other gathering of from as at producer EBITDA drilling assets Texas Natural year an the driven under companies faster Crestwood the Xx third asset quarter. unrealized in multiple XXXX completed our we derivative and some and and The area. and from from is activity, the is way and and in integration case. planned. acquired new the was with volumes

activity to We to North volume support sufficient in Texas XXXX. stability in continued see continue

brought and the BKV, during programs, and online is its its refrac Our largest customer, drilling quarter. wells new first successful continuing

year, tons turning year with long with initial beginning with TSA service industry million per early million our haul are a has capacity ExxonMobil. TSA, similar reserved Now conditions definitive a transportation standard excited terms of an XXXX. contracts. includes up of the capacity to per and CCS ExxonMobil The the gas metric reserved Under very X.X of signing XX to tons business, to transportation agreement natural we metric

the emission an amount the of pipeline reserved is existing transportation continue COX metric for with of instance CF follow. is corridor this to are natural to largest and region this industries we a Mississippi improve identified largest We in per emitters Donaldsonville the ton desire the than paid other total distance to We’ve expect fee, a up has a kind of less to the XX” tons capacity. gas The on miles. X the with its ExxonMobil, XXX commercial million to for and diameter distance. emissions. emitter flow compression. river use and conversion we this in there CCS store CF agreement ExxonMobil to of in expressed agreement area. year a its Supporting using permanently one the that using the to remainder metric smaller built From will emitters phase covers our announced largest pipe in in capture a CF profile build per diameter two-thirds supercritical purpose additional the approximately

discussions passing accelerated. sequestration emitters With IRA, have with and the the of providers other

additional it We pass XX that, discuss occur in-service dates industrial over Pablo update. With over beginning emitters contracting continue as to in XX expect to to activity next the our to financial XXXX. months target to I’ll

Pablo Mercado

highlights. Thank you, third Ben, with and start I’ll good everyone. the morning quarter

venture, relocation the segments prior capital achieved reflects Jesse Continuing were $XX EnLink Capital cash increase trend third the bringing million $XXX this from XXXX. delivered of As of contributions investment an our third and EBITDA. million adjusted to of the asset another the of projects. made mentioned, of distributions free of $XX operational a $XXX Marathon investment all significant XX% This EBITDA, plant total adjusted positive four EnLink to $XX representing EnLink quarter to after achieved quarterly This contributions. joint and expect our four to-date for contribution result EnLink $XX we million. to million included of from all our of and asset expenditures for record invest million cash flow timing results segments. in driven by growth million delivered expenses our also of year. strong XXXX, quarter quarters,

in strong XXXX sheet XXXX at ratio of quarter an of and of the position find the were offering with the September million a and tender of liquidity. XXXX notes. used a end ourselves we EnLink side, issued X.Xx In of leverage balance X.X%. $XXX On our August, senior proceeds due a for The upsized to very portion at notes ample senior

end during we of have the quarter range repurchased the active repurchase the $XXX quarter pro by than with to third of $XXX and plans at achieve third unit over $XX.X year activity Driven pace units which investors, to this billion, free $XXX year-to-date after years, guidance transactions, to The operations, least capital $X.XX maturities common GIP, million, the the million we to program expect our $XX quarter. results units, we momentum execution million be after less rata for program. on consecutive the our flow increased Consistent from to at our in adjusted in end million the the these meaningful for we're takes million $XXX no outstanding of distributions. In to our XXXX approximately cash top third XXXX the of common year. on including EBITDA notes. our returns and to of the buyback buyback our and Following growing increase million strong spend settled X.X continue we with remaining with allocation on

expect segments. to as XXXX, GMP we across Jesse volume and ahead in are strong our we momentum our seeing mentioned, meaningful businesses growth Looking

positioning On in the year, level flow. to continue capital of similar have free to XXXX front robust we expect a cash us investment this generate as we

and be the a Our million to with recent X.X remainders in capital has next great single XX% year project investment CCS digits. ExxonMobil economics underwrites in XXXX XXXX. program tons will multiple agreement metric for with high some This with approximately a $XXX million transportation involve us. minimum in spent The initial build midstream reserved deal typical results capacity and our our of for the case, in

that multiple volumes capacity a this year, However, low for outlook metric and tons and reach this $XX our per maximum will project million build and the beyond In of EnLink the the record achieved when the operations in single year reserve to summary, quarter improve for strong. digits. project third XXXX remains

our investment be back that, to business and return continue to Jesse. common in We approach both to and our grow disciplined holders. capital our can unit With it I'll turn

Jesse Arenivas

Thank which for you, Pablo. of EnLink team on year. this I'm proud in their relentless resulted focus has results the execution, excellent

We our questions. value our about team's what may the for EnLink. excited to and upon are call now to open build success to holds for that, I'm With future positioned investors create well you the

Operator

Our ahead. next question go Gabriel Moreen comes Mizuho Securities. from with Please

Gabriel Moreen

Hey! Good morning guys.

a spend I just Just curious, thinking guess had think Pablo I'm TSA. mentioned can ones. overall your the you on next what the the of wondering for businesses from step new CapEx a I you I speaking for with maybe in that. can Matterhorn just CapEx, and rest back and your talk on start ’XX take was of if maybe about ’XX, of year, couple quick about terms be should you broadly commitment contributing

Jesse Arenivas

the Yes, happy to Thanks question. for Gabe.

Matterhorn, to year, be deal we we total the value. the as investment meaningful this business that that's have guidance planned or course, at year you as business, drive for see CCS TMP so still know loan point to XX% next we Exxon we're million You that's $XX of at next about in of the the $XX as year. is this since this so not with expect ready yet across so our million said, million, but CapEx a a We of investment XX year expect we XXX. so to give of just going $XX and just growth project volume similar see do $XXX of going know On itself, to to leaves for and financing, had what level so we and million

expansion investments. Ben at Global attractive we or our Beyond attractive mentioned capital the downstream of of very an so $XX deal. Venture That's that, the million incremental see returns.

see because And this be capital free significant great and so probably that is mix might cash us similar changing, to year pretty distributions. can but the it you generating flow after spend that's the keeps

Gabriel Moreen

talk Just to that build? Thanks, to Pablo, that related and maybe just the double Can but How that? Do outlook high you capacity? may a question things you going talk about for problem, getting? talk now you're if I where can about any year kind growth. of new for given not stand ask or next with if a do processing tight your in be mid-con class need if may contemplate outflows, you about you digit

Ben Lamb

talked it’s We've and about additional Yeah. to not quite next add don’t so call it, be the having before terms bit out XX% basin, currently capacity to Ben. in Hey in we room of year. We foresee XX% Gabe, or a to mid-continent, processing would of run certainly of capacity. we've capacity got needing the

You very activity we're to the stays next do a heightened but is know efficient and for got always that period for care year well good of possibility think time, I an if that, in extended alternatives taken that's capital news we've respect. of

Gabriel Moreen

could I Thanks, Ben, pivot the TSA agreement. and then back just maybe if to

beyond you woodwork guess just other, participate. the think know get out what the additional commitment You minimum of brought the has you extent I volumes to to looking can how quickly announcement emitters

you how there you So around low might digits? just looking for guidance single build and on to think that that quickly

Jesse Arenivas

is Gabe, question. appreciate I this the Jesse. Hi

bit obviously that area we deal up XX We over in increased a know reduction we'd emission know I – threshold. will uncertain, to to XX that the think we business the Exxon believe the I additional anticipation the when execute. it tons months a the but metric to will win Timing year. is broadly, is to respect IRA, at the the million would flow ExxonMobil made see the come you think in XX credit you look on next you be expect absent With in. impact we biggest going investment

the coveted service very relationships you that in there. have decades we and know positioning. market positioned well long-standing many and them emitters, are manner, last do we safe in and over believe see the the efficient positioned we we them We feel believe well as So mile with to to expanding our providing addressable a

As far kind the of we LOIs, and are similar other they as I would think expect timeframe. progressing a

excited our position So we're very Louisiana. about in

mover evidenced many by as deals we First deal, the to look more Exxon and come. to forward

Gabriel Moreen

maybe then quick just follow if And a I Jesse. Great, have on that. could up

your of hold get things there that to for significant anticipate you of? Just need are any pipe, that new you’d portion a build permits or

Jesse Arenivas

will used we've there its permit, permitting, core be in all dealing Yes, stuff ample are the to schedule that to standard engineers, coastal time of with those obtain we but use and allowed permits.

Gabriel Moreen

Thanks guys. Got it.

Jesse Arenivas

Thanks Gabe.

Operator

Instructions]. [Operator

Our from next question Pickering. Michael with comes Cusimano

Michael Cusimano

congrats release. and you, on the Thank

Jesse Arenivas

Michael! Hey

Michael Cusimano

on I first. focus Permian the want to

growth not least past the You word, side. you offload – I'm midland ramp at might you up that curious I side Phantom, Delaware mentioned growth quarter be had the or the for that know Phantom. most on the temper right it’ on you maybe but as like came waiting - ‘shut of there this maybe don't were to volumes

especially the how idea to that with capacity bring to were you online. an – with added ramps that up Just trying the get able

Ben Lamb

Ben. its Michael, Yes

for on The capacity volume grow the were is We past that. quarter in and because the October, volume, to forward next Very on the the some the midland basin any to that back offloading and to be side. growth about growth side. system year. to be. was plant looking the exciting midland prior right on are not so exactly to it offloading have mode the now plant late we're had utilized up we unconstrained and Delaware in didn't seeing are we're side, We the starting You well

Michael Cusimano

enough months. XX the that you does next of don't give I line assuming, sight And Okay. for, know,

Just trying be for you think beyond to looking Phantom. could about expansion when essential

Jesse Arenivas

on we the sight be. the alternatives will having our all of more terms consider in we that not give all in of what does capacity producers, next for of ready conversations and processing on step from as we’ll But to of point to we made at say and communication good line capacity ample our producers us Phantom. it same XXXX, Yeah, evolves the with considered this based market next our decision the year, midland get when we're

opportunity that the to So the we you relocate if and to I’ll will future XXX of good could million on do work, day for remind after rely opportunity just be already opportunity over capacity cubic the some that another a candidate maybe is either per and idle do that in be is near the plant, our idle plant, or new for build future that some feet market acquired or the relocation. capacity, off-loads we right a recently to integration really of

Michael Cusimano

Got on I it. a sense. to up did comments Yeah, of couple follow also makes that you’ll want made.

I believe On Oklahoma digit the to comment, the double but be high single said digits. nitpicking, you’ll not previously on growth,

to sure, elaborate guess how about XX% to X% want XX% where to that I or make X% can should going – we comment. Just double to it digit you on if think is

Jesse Arenivas

that that kind be the range. or producer now time plans year XX% last as with seen see customers down point or little our which single say, hard But on were from bit means to just XX% like high to narrow we November a went of a unfolds, how expectations little Michael, it to ramp our increased digit said, that's to digit, low the from next Well X the bit up Xnd together, you suffice percentage but it’s it number or whether it's of to we Yes. XX% that next we year. X year have the a double in to for remains

Michael Cusimano

on I that's more can helpful. if then Texas. ask one Okay, And North

help there. down kind complete or know programs are us drilling rig, Like of – pad you I know rigs pick up they understand there's every just programs wondering full are two just put kind a you there. are? year what a of mentioned or a if and the You those rig then to now was of those you kind could here

Ben Lamb

In of Yes, exceeded their during case the they first expectations. that's in our sustained, brought BKV, I'm happy a quarter case drilling they it and they both. if to new pull program well-pad are their say online the

with was exceeded I to but great this think is expectations, of year. in of all ours and their their the line it a rest start and for year next plans

other The opportunistic. more customers, it's

fact, a and we'll that a see we see In we our customer there, bit from continue expectations quarter case where that activity. are, during acquired prices pad drill With investment customers. the kind in just smaller the think four-well a us to and I a of had from of we'll surprise was on to that outside the little continue acreage which they of opportunistic activity the Crestwood, gas bit private

Michael Cusimano

great. guys. all for Okay, you. That's Thank me

Jesse Arenivas

Thanks Michael.

Operator

comes Our Morgan. next from question Jeremy Tonet Please JP ahead. with go

Jeremy Tonet

Hi! Good morning.

Jesse Arenivas

morning. Good

Jeremy Tonet

Just could. with I bit a to off little start if Waha want

and at pop, exposure growth them of of your guess have much basin, same year? to so that's impede of and do of FT guess about producing time then is type having you're sufficient what hedged, next it you doesn’t customers, kind the feel good you how wondering, the Just that in I expected get production out I

Pablo Mercado

question. Yes, great

volumes. well, have Ben comments differentials kick Waha some Pablo off. So know and as This it the let sure you will impact expect we on don't me to I'm have a but big is

is expect [inaudible]. and these to to we accrued and Permian don't driven base guess I the so know, flare, producers activity want by you As

of of Just hedged a exposure. Coast Gulf pricing as in are a agreement. little fixed that already transportation volumes third the structurally XX% through Permian about generally, less than we our about reminder, basis. And our remaining to tied We've XX% fee a the are

numbers, those combine And than again, exposure. we've you you can see about know XX% fixed our stands. a as of fee it little half if So managed more you

Ben Lamb

reason investing why responsibility. to is gas the respect capacity, which we is in Whistler on most our that commitment market the basin, of of Matterhorn project the entered the on with future. the here the our basin, why for and the Midland of Midland recently, We customers side on for into also the transportation side firm the mostly we're And

transportation to Matterhorn in investment, that short we of XXXX. help as in firm get tight this see period part Now, term market that to some additional us the expect negotiated through we

we think on the great of side in So we're for midland the shape year next basin.

know mostly transportation On Delaware, companies our their that ExxonMobil, Oxy, planning EOG, book about Delaware and of care could an so have of do handle the their the any of capacity, the customers in but excellent transportation side have the side, we're the Delaware either. basin on job don't of the taking kinds business you we we firm needs, of concerns talking businesses

Jeremy Tonet

Got it. bit Matterhorn you've a helpful. That's here. And talked very about

schedule, even it's not to a gas comes budget. when chance fully there confirm want powered Any on online Just if everything is it early little progressing in on up. bit or cost get could any start to

Ben Lamb

we’ll our sure about as certainly efficiently operator. to in I the we talk anyway really in-service to say, and in would make they operator and not get be. an on-time closer we're the is they service can be to soon yes, date, as place point, the working since too this on-budget early it with But of and are that at not end as Yeah, terms service

Jeremy Tonet

pivot it. breakdown to and new Got XX you I COX into that moving over get and how you much horse state it with that the that's converted. XX COX you power PSI, state? it pipe, I wondering the with was was pressure, converted And the if – - wondering side, think could do just for miles the do XX across old XX kind what in This being XX about much see line the of just how pipe pipeline thereabouts said need portion just to

Jesse Arenivas

the diameter. move pipeline to be going the it's about in great and in converted, XX is thing it's so inches the the pipeline converted phase, to going through Yes, gaseous

a amount pressure. delivery line, supercritical build capacity a PSI XXXX-plus we'll At the state the take new phase the relatively be enormous Terminus Southern and pipeline we'll where an at fluid got of gaseous that to point modest to pipeline. of it's So critical phased Exxon the a will super construct pump station

Jeremy Tonet

it. Got

do or being MCXXX So wondering, [ph], - the compression just have anymore that's part XX to PSI or XX you there. add converted, pumping

part Just that to through think trying how worked?

Jesse Arenivas

to accepting movement do pump we at pressure not. sufficient way the the down No, make our compressors fluid We’ll be to in all our the station.

Jeremy Tonet

Thanks. leave helpful. That's I’ll it. there. Got it

Operator

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

Jesse Arenivas

this thank and morning your you Jordan call call on being the for continued everyone for thank So, facilitating the support. and

In wish We and meantime, we on and appreciate we always, forward you healthy updating interest our well. EnLink. Stay you look your As great have to continued fourth the in in February. results a investment day! quarter

Operator

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

may You disconnect. now

EnLink Midstream (ENLC) 2 Nov 222022 Q3 Earnings call transcript