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(a) | Organization of Business |
• | 88,528,451 common units representing an aggregate 22.0% limited partner interest in ENLK; |
• | 100.0% ownership interest in EnLink Midstream Partners GP, LLC, the general partner of ENLK (the “General Partner”), which owns a 0.4% general partner interest and all of the incentive distribution rights in ENLK; and |
• | 16% limited partner interest in EnLink Oklahoma T.O. |
(b) | Nature of Business |
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(a) | Basis of Presentation |
(b) | Adopted Accounting Standards |
(c) | Accounting Standards to be Adopted in Future Periods |
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Consideration: | |||
Cash | $ | 805.8 | |
Issuance of common units | 214.9 | ||
ENLK’s total installment payable, net of discount of $79.1 million assuming payments made on January 7, 2017 and 2018 | 420.9 | ||
Total consideration | $ | 1,441.6 | |
Purchase Price Allocation: | |||
Assets acquired: | |||
Current assets (including $12.8 million in cash) | $ | 23.0 | |
Property, plant and equipment | 406.1 | ||
Intangibles | 1,051.3 | ||
Liabilities assumed: | |||
Current liabilities | (38.8 | ) | |
Total identifiable net assets | $ | 1,441.6 |
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Gross Carrying Amount | Accumulated Amortization | Net Carrying Amount | |||||||||
Three Months Ended March 31, 2017 | |||||||||||
Customer relationships, beginning of period | $ | 1,795.8 | $ | (171.6 | ) | $ | 1,624.2 | ||||
Amortization expense | — | (29.5 | ) | (29.5 | ) | ||||||
Customer relationships, end of period | $ | 1,795.8 | $ | (201.1 | ) | $ | 1,594.7 |
2017 (remaining) | $ | 88.4 | |
2018 | 117.9 | ||
2019 | 117.9 | ||
2020 | 117.9 | ||
2021 | 117.9 | ||
Thereafter | 1,034.7 | ||
Total | $ | 1,594.7 |
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March 31, 2017 | December 31, 2016 | ||||||||||||||||||||||
Outstanding Principal | Premium (Discount) | Long-Term Debt | Outstanding Principal | Premium (Discount) | Long-Term Debt | ||||||||||||||||||
ENLK credit facility due 2020 (1) | $ | 330.0 | $ | — | $ | 330.0 | $ | 120.0 | $ | — | $ | 120.0 | |||||||||||
ENLC credit facility due 2019 (2) | 43.5 | — | 43.5 | 27.8 | — | 27.8 | |||||||||||||||||
2.70% Senior unsecured notes due 2019 | 400.0 | (0.2 | ) | 399.8 | 400.0 | (0.3 | ) | 399.7 | |||||||||||||||
7.125% Senior unsecured notes due 2022 (3) | 162.5 | 15.2 | 177.7 | 162.5 | 16.0 | 178.5 | |||||||||||||||||
4.40% Senior unsecured notes due 2024 | 550.0 | 2.4 | 552.4 | 550.0 | 2.5 | 552.5 | |||||||||||||||||
4.15% Senior unsecured notes due 2025 | 750.0 | (1.1 | ) | 748.9 | 750.0 | (1.1 | ) | 748.9 | |||||||||||||||
4.85% Senior unsecured notes due 2026 | 500.0 | (0.6 | ) | 499.4 | 500.0 | (0.7 | ) | 499.3 | |||||||||||||||
5.60% Senior unsecured notes due 2044 | 350.0 | (0.2 | ) | 349.8 | 350.0 | (0.2 | ) | 349.8 | |||||||||||||||
5.05% Senior unsecured notes due 2045 | 450.0 | (6.6 | ) | 443.4 | 450.0 | (6.6 | ) | 443.4 | |||||||||||||||
Debt classified as long-term | $ | 3,536.0 | $ | 8.9 | $ | 3,544.9 | $ | 3,310.3 | $ | 9.6 | $ | 3,319.9 | |||||||||||
Debt issuance cost (4) | (23.8 | ) | (24.6 | ) | |||||||||||||||||||
Long-term debt, net of unamortized issuance cost | $ | 3,521.1 | $ | 3,295.3 |
(1) | Bears interest based on Prime and/or LIBOR plus an applicable margin. The effective interest rate was 3.0% and 2.3% at March 31, 2017 and December 31, 2016, respectively. |
(2) | Bears interest based on Prime and/or LIBOR plus an applicable margin. The effective interest rate was 3.1% and 3.4% at March 31, 2017 and December 31, 2016, respectively. |
(3) | On April 3, 2017, ENLK issued notice to redeem its 7.125% senior unsecured notes due 2022 (the “2022 notes”). The 2022 notes will be redeemed on June 1, 2017 at 103.6% of the principal amount, plus accrued unpaid interest, for aggregate cash consideration of $174.1 million. |
(4) | Net of amortization of $10.0 million and $9.0 million at March 31, 2017 and December 31, 2016, respectively. |
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Three Months Ended March 31, | |||||||
2017 | 2016 | ||||||
ENLC income tax expense | $ | 3.0 | $ | 0.2 | |||
Total income tax expense | $ | 3.0 | $ | 0.2 |
Three Months Ended March 31, | |||||||
2017 | 2016 | ||||||
Tax expense (benefit) at statutory federal rate (35%) | $ | 0.4 | $ | (160.5 | ) | ||
State income taxes benefit, net of federal tax benefit | — | (14.9 | ) | ||||
Income tax expense from partnership | 0.5 | 1.0 | |||||
Unit-based compensation (1) | 2.3 | — | |||||
Non-deductible expense related to asset impairment | — | 173.9 | |||||
Other | (0.2 | ) | 0.7 | ||||
Total income tax expense | $ | 3.0 | $ | 0.2 |
(1) | Relates to tax deficiencies recorded on vested units, which are recognized on the income statement in accordance with the adoption of ASU 2016-09. |
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(a) | Issuance of Common Units |
(b) | Distributions |
Declaration period | Distribution/unit | Date paid/payable | ||||
2017 | ||||||
Fourth Quarter of 2016 | $ | 0.39 | February 13, 2017 | |||
First Quarter of 2017 | $ | 0.39 | May 12, 2017 | |||
2016 | ||||||
Fourth Quarter of 2015 | $ | 0.39 | February 11, 2016 | |||
First Quarter of 2016 | $ | 0.39 | May 12, 2016 |
(c) | Allocation of ENLK Income |
Three Months Ended March 31, 2017 | |||||||
2017 | 2016 | ||||||
Income allocation for incentive distributions | $ | 14.7 | $ | 13.8 | |||
Unit-based compensation attributable to ENLC’s restricted units | (8.8 | ) | (4.0 | ) | |||
General Partner share of net income (loss) | — | (2.4 | ) | ||||
General Partner interest in net income | $ | 5.9 | $ | 7.4 |
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Three Months Ended March 31, | |||||||
2017 | 2016 | ||||||
EnLink Midstream, LLC interest in net loss | $ | (1.9 | ) | $ | (457.6 | ) | |
Distributed earnings allocated to: | |||||||
Common units (1) | $ | 45.9 | $ | 45.6 | |||
Unvested restricted units (1) | 0.6 | 0.5 | |||||
Total distributed earnings | $ | 46.5 | $ | 46.1 | |||
Undistributed loss allocated to: | |||||||
Common units | $ | (47.8 | ) | $ | (498.5 | ) | |
Unvested restricted units | (0.6 | ) | (5.2 | ) | |||
Total undistributed loss | $ | (48.4 | ) | $ | (503.7 | ) | |
Net loss allocated to: | |||||||
Common units | $ | (1.9 | ) | $ | (452.9 | ) | |
Unvested restricted units | — | (4.7 | ) | ||||
Total net loss | $ | (1.9 | ) | $ | (457.6 | ) | |
Basic and diluted net loss per unit: | |||||||
Basic | $ | (0.01 | ) | $ | (2.56 | ) | |
Diluted | $ | (0.01 | ) | $ | (2.56 | ) |
(1) | For the three months ended March 31, 2017 and 2016, represents a declared distribution of $0.255 per unit payable May 15, 2017 and a declared distribution of $0.255 per unit payable May 13, 2016, respectively. |
Declaration period | Distribution/unit | Date paid/payable | ||||
2017 | ||||||
Fourth Quarter of 2016 | $ | 0.255 | February 14, 2017 | |||
First Quarter of 2017 | $ | 0.255 | May 15, 2017 | |||
2016 | ||||||
Fourth Quarter of 2015 | $ | 0.255 | February 12, 2016 | |||
First Quarter of 2016 | $ | 0.255 | May 13, 2016 |
Three Months Ended March 31, | |||||
2017 | 2016 | ||||
Basic and diluted earnings per unit: | |||||
Weighted average common units outstanding | 180.2 | 178.7 | |||
Diluted weighted average units outstanding: | |||||
Weighted average basic common units outstanding | 180.2 | 178.7 | |||
Dilutive effect of restricted incentive units issued | — | — | |||
Total weighted average diluted common units outstanding | 180.2 | 178.7 |
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Three Months Ended March 31, 2017 | |||
Balance, beginning of period | $ | 13.5 | |
Accretion expense | 0.2 | ||
Balance, end of period | $ | 13.7 |
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• | a contractual right to the economic benefits and burdens associated with Devon’s 38.75% ownership interest in Gulf Coast Fractionators (“GCF”) at March 31, 2017 and December 31, 2016; |
• | an approximate 30.0% ownership in Cedar Cove Midstream LLC (“Cedar Cove JV”) at March 31, 2017 and December 31, 2016. On November 9, 2016, we formed the Cedar Cove JV with Kinder Morgan, Inc., which consists of gathering and compression assets in Blaine County, Oklahoma, the heart of the Sooner Trend Anadarko Basin Canadian and Kingfisher Counties play; |
• | an approximate 31.0% common unit ownership interest in Howard Energy Partners (“HEP”) at December 31, 2016. In December 2016, we entered into an agreement to sell our ownership interest in HEP. We finalized the sale in the first quarter of 2017 and received net proceeds of $189.7 million. |
Gulf Coast Fractionators | Howard Energy Partners | Cedar Cove JV | Total | |||||||||||||
Three Months Ended | ||||||||||||||||
March 31, 2017 | ||||||||||||||||
Contributions | $ | — | $ | — | $ | 6.0 | $ | 6.0 | ||||||||
Distributions | $ | 2.7 | $ | — | $ | 0.2 | $ | 2.9 | ||||||||
Equity in income (loss) (1) | $ | 4.0 | $ | (3.4 | ) | $ | 0.1 | $ | 0.7 | |||||||
March 31, 2016 | ||||||||||||||||
Contributions | $ | — | $ | 7.1 | $ | — | $ | 7.1 | ||||||||
Distributions | $ | 3.0 | $ | 6.2 | $ | — | $ | 9.2 | ||||||||
Equity in loss | $ | (1.7 | ) | $ | (0.7 | ) | $ | — | $ | (2.4 | ) |
(1) | Includes a loss of $3.4 million for the three months ended March 31, 2017 from the sale of HEP in March 2017. |
March 31, 2017 | December 31, 2016 | ||||||
Gulf Coast Fractionators | $ | 49.8 | $ | 48.5 | |||
Howard Energy Partners | — | 193.1 | |||||
Cedar Cove JV | 34.7 | 28.8 | |||||
Total investment in unconsolidated affiliates | $ | 84.5 | $ | 270.4 |
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(a) | Long-Term Incentive Plans |
Three Months Ended March 31, | |||||||
2017 | 2016 | ||||||
Cost of unit-based compensation charged to general and administrative expense | $ | 14.4 | $ | 6.3 | |||
Cost of unit-based compensation charged to operating expense | 5.0 | 1.7 | |||||
Total unit-based compensation expense | $ | 19.4 | $ | 8.0 | |||
Interest of non-controlling partners in unit-based compensation | $ | 7.3 | $ | 2.9 | |||
Amount of related income tax expense recognized in net income | $ | 4.6 | $ | 1.9 |
(b) | EnLink Midstream Partners, LP Restricted Incentive Units |
Three Months Ended March 31, 2017 | ||||||||
EnLink Midstream Partners, LP Restricted Incentive Units: | Number of Units | Weighted Average Grant-Date Fair Value | ||||||
Non-vested, beginning of period | 2,024,820 | $ | 19.05 | |||||
Granted (1) | 822,865 | 18.46 | ||||||
Vested (1)(2) | (795,188 | ) | 25.84 | |||||
Forfeited | (6,997 | ) | 16.87 | |||||
Non-vested, end of period | 2,045,500 | $ | 16.18 | |||||
Aggregate intrinsic value, end of period (in millions) | $ | 37.4 |
(1) | Restricted incentive units were issued in the first quarter of 2017 to officers and other employees. These restricted incentive units typically vest at the end of three years. In March 2017, ENLK issued 262,288 restricted incentive units with a fair value of $5.1 million to officers and certain employees as bonus payments for 2016, and these restricted incentive units vested immediately and are included in the restricted incentive units granted and vested line items. |
(2) | Vested units include 258,145 units withheld for payroll taxes paid on behalf of employees. |
Three Months Ended March 31, | ||||||||
EnLink Midstream Partners, LP Restricted Incentive Units: | 2017 | 2016 | ||||||
Aggregate intrinsic value of units vested | $ | 15.3 | $ | 3.7 | ||||
Fair value of units vested | $ | 20.5 | $ | 9.0 |
(c) | EnLink Midstream Partners, LP Performance Units |
EnLink Midstream Partners, LP Performance Units: | March 2017 | |||
Beginning TSR Price | $ | 17.55 | ||
Risk-free interest rate | 1.62 | % | ||
Volatility factor | 43.94 | % | ||
Distribution yield | 8.7 | % |
Three Months Ended March 31, 2017 | ||||||||
EnLink Midstream Partners, LP Performance Units: | Number of Units | Weighted Average Grant-Date Fair Value | ||||||
Non-vested, beginning of period | 408,637 | $ | 11.53 | |||||
Granted | 176,648 | 25.73 | ||||||
Forfeited | — | — | ||||||
Non-vested, end of period | 585,285 | $ | 15.82 | |||||
Aggregate intrinsic value, end of period (in millions) | $ | 10.7 |
(d) | EnLink Midstream, LLC Restricted Incentive Units |
Three Months Ended March 31, 2017 | ||||||||
EnLink Midstream, LLC Restricted Incentive Units: | Number of Units | Weighted Average Grant-Date Fair Value | ||||||
Non-vested, beginning of period | 1,897,298 | $ | 19.96 | |||||
Granted (1) | 781,842 | 19.29 | ||||||
Vested (1)(2) | (726,692 | ) | 28.07 | |||||
Forfeited | (6,706 | ) | 17.58 | |||||
Non-vested, end of period | 1,945,742 | $ | 16.67 | |||||
Aggregate intrinsic value, end of period (in millions) | $ | 37.7 |
(1) | Restricted incentive units were issued in the first quarter of 2017 to officers and other employees. These restricted incentive units typically vest at the end of three years. In March 2017, we issued 258,606 restricted incentive units with a fair value of $5.0 million to officers and certain employees as bonus payments for 2016, and these restricted incentive units vested immediately and are included in the restricted incentive units granted and vested line items. |
(2) | Vested units include 224,709 units withheld for payroll taxes paid on behalf of employees. |
Three Months Ended March 31, | ||||||||
EnLink Midstream LLC Restricted Incentive Units: | 2017 | 2016 | ||||||
Aggregate intrinsic value of units vested | $ | 14.3 | $ | 3.8 | ||||
Fair value of units vested | $ | 20.4 | $ | 11.8 |
(e) | EnLink Midstream, LLC’s Performance Units |
EnLink Midstream, LLC Performance Units: | March 2017 | |||
Beginning TSR Price | $ | 18.29 | ||
Risk-free interest rate | 1.62 | % | ||
Volatility factor | 52.07 | % | ||
Distribution yield | 5.4 | % |
Three Months Ended March 31, 2017 | ||||||||
EnLink Midstream, LLC Performance Units: | Number of Units | Weighted Average Grant-Date Fair Value | ||||||
Non-vested, beginning of period | 384,264 | $ | 19.30 | |||||
Granted | 164,575 | 28.77 | ||||||
Forfeited | — | — | ||||||
Non-vested, end of period | 548,839 | $ | 22.14 | |||||
Aggregate intrinsic value, end of period (in millions) | $ | 10.6 |
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Three Months Ended March 31, | |||||||
2017 | 2016 | ||||||
Change in fair value of derivatives | $ | 5.3 | $ | (6.0 | ) | ||
Realized gain (loss) on derivatives | (2.5 | ) | 5.6 | ||||
Gain (loss) on derivative activity | $ | 2.8 | $ | (0.4 | ) |
March 31, 2017 | December 31, 2016 | ||||||
Fair value of derivative assets — current | $ | 2.1 | $ | 1.3 | |||
Fair value of derivative assets — long-term | 0.1 | — | |||||
Fair value of derivative liabilities — current | (2.9 | ) | (7.6 | ) | |||
Fair value of derivative liabilities — long-term | (0.3 | ) | — | ||||
Net fair value of derivatives | $ | (1.0 | ) | $ | (6.3 | ) |
March 31, 2017 | |||||||||||
Commodity | Instruments | Unit | Volume | Fair Value | |||||||
NGL (short contracts) | Swaps | Gallons | (32.9 | ) | $ | (0.3 | ) | ||||
NGL (long contracts) | Swaps | Gallons | 12.8 | (0.2 | ) | ||||||
Natural Gas (short contracts) | Swaps | MMBtu | (15.4 | ) | (0.3 | ) | |||||
Natural Gas (long contracts) | Swaps | MMBtu | 15.1 | (0.4 | ) | ||||||
Condensate (short contracts) | Swaps | MMbbls | — | 0.1 | |||||||
Condensate (long contracts) | Swaps | MMbbls | — | 0.1 | |||||||
Total fair value of derivatives | $ | (1.0 | ) |
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Level 2 | |||||||
March 31, 2017 | December 31, 2016 | ||||||
Commodity Swaps (1) | $ | (1.0 | ) | $ | (6.3 | ) | |
Total | $ | (1.0 | ) | $ | (6.3 | ) |
(1) | The fair values of derivative contracts included in assets or liabilities for risk management activities represent the amount at which the instruments could be exchanged in a current arms-length transaction adjusted for our credit risk and/or the counterparty credit risk as required under ASC 820. |
March 31, 2017 | December 31, 2016 | ||||||||||||||
Carrying Value | Fair Value | Carrying Value | Fair Value | ||||||||||||
Long-term debt (1) | $ | 3,521.1 | $ | 3,543.1 | $ | 3,295.8 | $ | 3,253.6 | |||||||
Installment Payables | $ | 230.1 | $ | 232.9 | $ | 473.2 | $ | 476.6 | |||||||
Obligations under capital lease | $ | 5.1 | $ | 4.3 | $ | 6.6 | $ | 6.1 |
(1) | The carrying values of long-term debt are reduced by debt issuance costs of $23.8 million and $24.6 million at March 31, 2017 and December 31, 2016, respectively. The respective fair values do not factor in debt issuance costs. |
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(a) | Severance and Change in Control Agreements |
(b) | Environmental Issues |
(c) | Litigation Contingencies |
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Texas | Louisiana | Oklahoma | Crude and Condensate | Corporate | Totals | ||||||||||||||||||
Three Months Ended March 31, 2017 | |||||||||||||||||||||||
Product sales | $ | 85.1 | $ | 544.5 | $ | 14.5 | $ | 345.9 | $ | — | $ | 990.0 | |||||||||||
Product sales—related parties | 106.5 | 10.2 | 64.4 | 0.8 | (139.2 | ) | 42.7 | ||||||||||||||||
Midstream services | 27.8 | 53.1 | 27.9 | 18.6 | — | 127.4 | |||||||||||||||||
Midstream services—related parties | 105.1 | 29.0 | 49.4 | 3.3 | (27.8 | ) | 159.0 | ||||||||||||||||
Cost of sales | (179.2 | ) | (564.7 | ) | (88.7 | ) | (336.7 | ) | 167.0 | (1,002.3 | ) | ||||||||||||
Operating expenses | (43.9 | ) | (25.4 | ) | (14.1 | ) | (20.7 | ) | — | (104.1 | ) | ||||||||||||
Gain on derivative activity | — | — | — | — | 2.8 | 2.8 | |||||||||||||||||
Segment profit | $ | 101.4 | $ | 46.7 | $ | 53.4 | $ | 11.2 | $ | 2.8 | $ | 215.5 | |||||||||||
Depreciation and amortization | $ | (49.8 | ) | $ | (28.1 | ) | $ | (36.5 | ) | $ | (11.5 | ) | $ | (2.4 | ) | $ | (128.3 | ) | |||||
Goodwill | $ | 232.0 | $ | — | $ | 190.3 | $ | — | $ | 1,119.9 | $ | 1,542.2 | |||||||||||
Capital expenditures | $ | 28.3 | $ | 32.7 | $ | 140.7 | $ | 37.4 | $ | 9.0 | $ | 248.1 | |||||||||||
Three Months Ended March 31, 2016 | |||||||||||||||||||||||
Product sales | $ | 62.5 | $ | 287.7 | $ | 7.8 | $ | 230.5 | $ | — | $ | 588.5 | |||||||||||
Product sales—related parties | 37.3 | 7.4 | 10.6 | 0.2 | (31.0 | ) | 24.5 | ||||||||||||||||
Midstream services | 27.4 | 55.2 | 15.1 | 16.8 | — | 114.5 | |||||||||||||||||
Midstream services—related parties | 110.3 | 12.7 | 45.0 | 5.2 | (10.6 | ) | 162.6 | ||||||||||||||||
Cost of sales | (91.3 | ) | (302.1 | ) | (19.3 | ) | (215.1 | ) | 41.6 | (586.2 | ) | ||||||||||||
Operating expenses | (39.3 | ) | (23.3 | ) | (12.8 | ) | (22.8 | ) | — | (98.2 | ) | ||||||||||||
Loss on derivative activity | — | — | — | — | (0.4 | ) | (0.4 | ) | |||||||||||||||
Segment profit (loss) | $ | 106.9 | $ | 37.6 | $ | 46.4 | $ | 14.8 | $ | (0.4 | ) | $ | 205.3 | ||||||||||
Depreciation and amortization | $ | (46.2 | ) | $ | (29.3 | ) | $ | (33.8 | ) | $ | (10.4 | ) | $ | (2.2 | ) | $ | (121.9 | ) | |||||
Impairments | $ | (473.1 | ) | $ | — | $ | — | $ | (93.2 | ) | $ | (307.0 | ) | $ | (873.3 | ) | |||||||
Goodwill | $ | 230.4 | $ | — | $ | 190.3 | $ | — | $ | 1,119.9 | $ | 1,540.6 | |||||||||||
Capital expenditures | $ | 23.3 | $ | 22.7 | $ | 69.2 | $ | 3.3 | $ | 1.9 | $ | 120.4 |
Segment Identifiable Assets: | March 31, 2017 | December 31, 2016 | |||||
Texas | $ | 3,132.6 | $ | 3,142.6 | |||
Louisiana | 2,312.7 | 2,349.3 | |||||
Oklahoma | 2,629.8 | 2,524.5 | |||||
Crude and Condensate | 861.9 | 836.8 | |||||
Corporate | 1,240.5 | 1,422.7 | |||||
Total identifiable assets | $ | 10,177.5 | $ | 10,275.9 |
Three Months Ended March 31, | |||||||
2017 | 2016 | ||||||
Segment profits | $ | 215.5 | $ | 205.3 | |||
General and administrative expenses | (36.1 | ) | (35.1 | ) | |||
Gain (loss) on disposition of assets | (5.1 | ) | 0.2 | ||||
Depreciation and amortization | (128.3 | ) | (121.9 | ) | |||
Impairments | (7.0 | ) | (873.3 | ) | |||
Gain on litigation settlement | 17.5 | $ | — | ||||
Operating income (loss) | $ | 56.5 | $ | (824.8 | ) |
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Three Months Ended March 31, | |||||||
2017 | 2016 | ||||||
Non-cash financing activities: | |||||||
Non-cash issuance of ENLC common units (1) | $ | — | $ | 214.9 | |||
Installment payable, net of discount of $79.1 million (2) | — | 420.9 |
(1) | Non-cash ENLC common units were issued as partial consideration for the acquisition of EnLink Oklahoma T.O. assets. See “Note 3—Acquisition” for further discussion. |
(2) | ENLK incurred installment purchase obligations, net of discount, payable to the seller in connection with the EnLink Oklahoma T.O. assets. ENLK paid the first installment on January 6, 2017 and will pay the final installment no later than January 7, 2018. See “Note 3—Acquisition” for further discussion. |
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March 31, 2017 | December 31, 2016 | ||||||
Accrued interest | $ | 58.4 | $ | 34.2 | |||
Accrued wages and benefits, including taxes | 9.2 | 19.0 | |||||
Accrued ad valorem taxes | 13.0 | 23.5 | |||||
Capital expenditure accruals | 56.3 | 64.6 | |||||
Onerous performance obligations | 15.8 | 15.9 | |||||
Other | 61.6 | 60.3 | |||||
Other current liabilities | $ | 214.3 | $ | 217.5 |
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(c) | Accounting Standards to be Adopted in Future Periods |
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Consideration: | |||
Cash | $ | 805.8 | |
Issuance of common units | 214.9 | ||
ENLK’s total installment payable, net of discount of $79.1 million assuming payments made on January 7, 2017 and 2018 | 420.9 | ||
Total consideration | $ | 1,441.6 | |
Purchase Price Allocation: | |||
Assets acquired: | |||
Current assets (including $12.8 million in cash) | $ | 23.0 | |
Property, plant and equipment | 406.1 | ||
Intangibles | 1,051.3 | ||
Liabilities assumed: | |||
Current liabilities | (38.8 | ) | |
Total identifiable net assets | $ | 1,441.6 |
|
Gross Carrying Amount | Accumulated Amortization | Net Carrying Amount | |||||||||
Three Months Ended March 31, 2017 | |||||||||||
Customer relationships, beginning of period | $ | 1,795.8 | $ | (171.6 | ) | $ | 1,624.2 | ||||
Amortization expense | — | (29.5 | ) | (29.5 | ) | ||||||
Customer relationships, end of period | $ | 1,795.8 | $ | (201.1 | ) | $ | 1,594.7 |
2017 (remaining) | $ | 88.4 | |
2018 | 117.9 | ||
2019 | 117.9 | ||
2020 | 117.9 | ||
2021 | 117.9 | ||
Thereafter | 1,034.7 | ||
Total | $ | 1,594.7 |
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March 31, 2017 | December 31, 2016 | ||||||||||||||||||||||
Outstanding Principal | Premium (Discount) | Long-Term Debt | Outstanding Principal | Premium (Discount) | Long-Term Debt | ||||||||||||||||||
ENLK credit facility due 2020 (1) | $ | 330.0 | $ | — | $ | 330.0 | $ | 120.0 | $ | — | $ | 120.0 | |||||||||||
ENLC credit facility due 2019 (2) | 43.5 | — | 43.5 | 27.8 | — | 27.8 | |||||||||||||||||
2.70% Senior unsecured notes due 2019 | 400.0 | (0.2 | ) | 399.8 | 400.0 | (0.3 | ) | 399.7 | |||||||||||||||
7.125% Senior unsecured notes due 2022 (3) | 162.5 | 15.2 | 177.7 | 162.5 | 16.0 | 178.5 | |||||||||||||||||
4.40% Senior unsecured notes due 2024 | 550.0 | 2.4 | 552.4 | 550.0 | 2.5 | 552.5 | |||||||||||||||||
4.15% Senior unsecured notes due 2025 | 750.0 | (1.1 | ) | 748.9 | 750.0 | (1.1 | ) | 748.9 | |||||||||||||||
4.85% Senior unsecured notes due 2026 | 500.0 | (0.6 | ) | 499.4 | 500.0 | (0.7 | ) | 499.3 | |||||||||||||||
5.60% Senior unsecured notes due 2044 | 350.0 | (0.2 | ) | 349.8 | 350.0 | (0.2 | ) | 349.8 | |||||||||||||||
5.05% Senior unsecured notes due 2045 | 450.0 | (6.6 | ) | 443.4 | 450.0 | (6.6 | ) | 443.4 | |||||||||||||||
Debt classified as long-term | $ | 3,536.0 | $ | 8.9 | $ | 3,544.9 | $ | 3,310.3 | $ | 9.6 | $ | 3,319.9 | |||||||||||
Debt issuance cost (4) | (23.8 | ) | (24.6 | ) | |||||||||||||||||||
Long-term debt, net of unamortized issuance cost | $ | 3,521.1 | $ | 3,295.3 |
(1) | Bears interest based on Prime and/or LIBOR plus an applicable margin. The effective interest rate was 3.0% and 2.3% at March 31, 2017 and December 31, 2016, respectively. |
(2) | Bears interest based on Prime and/or LIBOR plus an applicable margin. The effective interest rate was 3.1% and 3.4% at March 31, 2017 and December 31, 2016, respectively. |
(3) | On April 3, 2017, ENLK issued notice to redeem its 7.125% senior unsecured notes due 2022 (the “2022 notes”). The 2022 notes will be redeemed on June 1, 2017 at 103.6% of the principal amount, plus accrued unpaid interest, for aggregate cash consideration of $174.1 million. |
(4) | Net of amortization of $10.0 million and $9.0 million at March 31, 2017 and December 31, 2016, respectively. |
|
Three Months Ended March 31, | |||||||
2017 | 2016 | ||||||
ENLC income tax expense | $ | 3.0 | $ | 0.2 | |||
Total income tax expense | $ | 3.0 | $ | 0.2 |
Three Months Ended March 31, | |||||||
2017 | 2016 | ||||||
Tax expense (benefit) at statutory federal rate (35%) | $ | 0.4 | $ | (160.5 | ) | ||
State income taxes benefit, net of federal tax benefit | — | (14.9 | ) | ||||
Income tax expense from partnership | 0.5 | 1.0 | |||||
Unit-based compensation (1) | 2.3 | — | |||||
Non-deductible expense related to asset impairment | — | 173.9 | |||||
Other | (0.2 | ) | 0.7 | ||||
Total income tax expense | $ | 3.0 | $ | 0.2 |
(1) | Relates to tax deficiencies recorded on vested units, which are recognized on the income statement in accordance with the adoption of ASU 2016-09. |
|
Declaration period | Distribution/unit | Date paid/payable | ||||
2017 | ||||||
Fourth Quarter of 2016 | $ | 0.39 | February 13, 2017 | |||
First Quarter of 2017 | $ | 0.39 | May 12, 2017 | |||
2016 | ||||||
Fourth Quarter of 2015 | $ | 0.39 | February 11, 2016 | |||
First Quarter of 2016 | $ | 0.39 | May 12, 2016 |
Three Months Ended March 31, 2017 | |||||||
2017 | 2016 | ||||||
Income allocation for incentive distributions | $ | 14.7 | $ | 13.8 | |||
Unit-based compensation attributable to ENLC’s restricted units | (8.8 | ) | (4.0 | ) | |||
General Partner share of net income (loss) | — | (2.4 | ) | ||||
General Partner interest in net income | $ | 5.9 | $ | 7.4 |
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Three Months Ended March 31, | |||||||
2017 | 2016 | ||||||
EnLink Midstream, LLC interest in net loss | $ | (1.9 | ) | $ | (457.6 | ) | |
Distributed earnings allocated to: | |||||||
Common units (1) | $ | 45.9 | $ | 45.6 | |||
Unvested restricted units (1) | 0.6 | 0.5 | |||||
Total distributed earnings | $ | 46.5 | $ | 46.1 | |||
Undistributed loss allocated to: | |||||||
Common units | $ | (47.8 | ) | $ | (498.5 | ) | |
Unvested restricted units | (0.6 | ) | (5.2 | ) | |||
Total undistributed loss | $ | (48.4 | ) | $ | (503.7 | ) | |
Net loss allocated to: | |||||||
Common units | $ | (1.9 | ) | $ | (452.9 | ) | |
Unvested restricted units | — | (4.7 | ) | ||||
Total net loss | $ | (1.9 | ) | $ | (457.6 | ) | |
Basic and diluted net loss per unit: | |||||||
Basic | $ | (0.01 | ) | $ | (2.56 | ) | |
Diluted | $ | (0.01 | ) | $ | (2.56 | ) |
(1) | For the three months ended March 31, 2017 and 2016, represents a declared distribution of $0.255 per unit payable May 15, 2017 and a declared distribution of $0.255 per unit payable May 13, 2016, respectively. |
Declaration period | Distribution/unit | Date paid/payable | ||||
2017 | ||||||
Fourth Quarter of 2016 | $ | 0.255 | February 14, 2017 | |||
First Quarter of 2017 | $ | 0.255 | May 15, 2017 | |||
2016 | ||||||
Fourth Quarter of 2015 | $ | 0.255 | February 12, 2016 | |||
First Quarter of 2016 | $ | 0.255 | May 13, 2016 |
Three Months Ended March 31, | |||||
2017 | 2016 | ||||
Basic and diluted earnings per unit: | |||||
Weighted average common units outstanding | 180.2 | 178.7 | |||
Diluted weighted average units outstanding: | |||||
Weighted average basic common units outstanding | 180.2 | 178.7 | |||
Dilutive effect of restricted incentive units issued | — | — | |||
Total weighted average diluted common units outstanding | 180.2 | 178.7 |
|
Three Months Ended March 31, 2017 | |||
Balance, beginning of period | $ | 13.5 | |
Accretion expense | 0.2 | ||
Balance, end of period | $ | 13.7 |
|
Gulf Coast Fractionators | Howard Energy Partners | Cedar Cove JV | Total | |||||||||||||
Three Months Ended | ||||||||||||||||
March 31, 2017 | ||||||||||||||||
Contributions | $ | — | $ | — | $ | 6.0 | $ | 6.0 | ||||||||
Distributions | $ | 2.7 | $ | — | $ | 0.2 | $ | 2.9 | ||||||||
Equity in income (loss) (1) | $ | 4.0 | $ | (3.4 | ) | $ | 0.1 | $ | 0.7 | |||||||
March 31, 2016 | ||||||||||||||||
Contributions | $ | — | $ | 7.1 | $ | — | $ | 7.1 | ||||||||
Distributions | $ | 3.0 | $ | 6.2 | $ | — | $ | 9.2 | ||||||||
Equity in loss | $ | (1.7 | ) | $ | (0.7 | ) | $ | — | $ | (2.4 | ) |
(1) | Includes a loss of $3.4 million for the three months ended March 31, 2017 from the sale of HEP in March 2017. |
March 31, 2017 | December 31, 2016 | ||||||
Gulf Coast Fractionators | $ | 49.8 | $ | 48.5 | |||
Howard Energy Partners | — | 193.1 | |||||
Cedar Cove JV | 34.7 | 28.8 | |||||
Total investment in unconsolidated affiliates | $ | 84.5 | $ | 270.4 |
|
Three Months Ended March 31, | |||||||
2017 | 2016 | ||||||
Cost of unit-based compensation charged to general and administrative expense | $ | 14.4 | $ | 6.3 | |||
Cost of unit-based compensation charged to operating expense | 5.0 | 1.7 | |||||
Total unit-based compensation expense | $ | 19.4 | $ | 8.0 | |||
Interest of non-controlling partners in unit-based compensation | $ | 7.3 | $ | 2.9 | |||
Amount of related income tax expense recognized in net income | $ | 4.6 | $ | 1.9 |
Three Months Ended March 31, 2017 | ||||||||
EnLink Midstream, LLC Restricted Incentive Units: | Number of Units | Weighted Average Grant-Date Fair Value | ||||||
Non-vested, beginning of period | 1,897,298 | $ | 19.96 | |||||
Granted (1) | 781,842 | 19.29 | ||||||
Vested (1)(2) | (726,692 | ) | 28.07 | |||||
Forfeited | (6,706 | ) | 17.58 | |||||
Non-vested, end of period | 1,945,742 | $ | 16.67 | |||||
Aggregate intrinsic value, end of period (in millions) | $ | 37.7 |
(1) | Restricted incentive units were issued in the first quarter of 2017 to officers and other employees. These restricted incentive units typically vest at the end of three years. In March 2017, we issued 258,606 restricted incentive units with a fair value of $5.0 million to officers and certain employees as bonus payments for 2016, and these restricted incentive units vested immediately and are included in the restricted incentive units granted and vested line items. |
(2) | Vested units include 224,709 units withheld for payroll taxes paid on behalf of employees. |
Three Months Ended March 31, 2017 | ||||||||
EnLink Midstream Partners, LP Restricted Incentive Units: | Number of Units | Weighted Average Grant-Date Fair Value | ||||||
Non-vested, beginning of period | 2,024,820 | $ | 19.05 | |||||
Granted (1) | 822,865 | 18.46 | ||||||
Vested (1)(2) | (795,188 | ) | 25.84 | |||||
Forfeited | (6,997 | ) | 16.87 | |||||
Non-vested, end of period | 2,045,500 | $ | 16.18 | |||||
Aggregate intrinsic value, end of period (in millions) | $ | 37.4 |
(1) | Restricted incentive units were issued in the first quarter of 2017 to officers and other employees. These restricted incentive units typically vest at the end of three years. In March 2017, ENLK issued 262,288 restricted incentive units with a fair value of $5.1 million to officers and certain employees as bonus payments for 2016, and these restricted incentive units vested immediately and are included in the restricted incentive units granted and vested line items. |
(2) | Vested units include 258,145 units withheld for payroll taxes paid on behalf of employees. |
Three Months Ended March 31, | ||||||||
EnLink Midstream LLC Restricted Incentive Units: | 2017 | 2016 | ||||||
Aggregate intrinsic value of units vested | $ | 14.3 | $ | 3.8 | ||||
Fair value of units vested | $ | 20.4 | $ | 11.8 |
Three Months Ended March 31, | ||||||||
EnLink Midstream Partners, LP Restricted Incentive Units: | 2017 | 2016 | ||||||
Aggregate intrinsic value of units vested | $ | 15.3 | $ | 3.7 | ||||
Fair value of units vested | $ | 20.5 | $ | 9.0 |
EnLink Midstream Partners, LP Performance Units: | March 2017 | |||
Beginning TSR Price | $ | 17.55 | ||
Risk-free interest rate | 1.62 | % | ||
Volatility factor | 43.94 | % | ||
Distribution yield | 8.7 | % |
EnLink Midstream, LLC Performance Units: | March 2017 | |||
Beginning TSR Price | $ | 18.29 | ||
Risk-free interest rate | 1.62 | % | ||
Volatility factor | 52.07 | % | ||
Distribution yield | 5.4 | % |
Three Months Ended March 31, 2017 | ||||||||
EnLink Midstream, LLC Performance Units: | Number of Units | Weighted Average Grant-Date Fair Value | ||||||
Non-vested, beginning of period | 384,264 | $ | 19.30 | |||||
Granted | 164,575 | 28.77 | ||||||
Forfeited | — | — | ||||||
Non-vested, end of period | 548,839 | $ | 22.14 | |||||
Aggregate intrinsic value, end of period (in millions) | $ | 10.6 |
Three Months Ended March 31, 2017 | ||||||||
EnLink Midstream Partners, LP Performance Units: | Number of Units | Weighted Average Grant-Date Fair Value | ||||||
Non-vested, beginning of period | 408,637 | $ | 11.53 | |||||
Granted | 176,648 | 25.73 | ||||||
Forfeited | — | — | ||||||
Non-vested, end of period | 585,285 | $ | 15.82 | |||||
Aggregate intrinsic value, end of period (in millions) | $ | 10.7 |
|
Three Months Ended March 31, | |||||||
2017 | 2016 | ||||||
Change in fair value of derivatives | $ | 5.3 | $ | (6.0 | ) | ||
Realized gain (loss) on derivatives | (2.5 | ) | 5.6 | ||||
Gain (loss) on derivative activity | $ | 2.8 | $ | (0.4 | ) |
March 31, 2017 | December 31, 2016 | ||||||
Fair value of derivative assets — current | $ | 2.1 | $ | 1.3 | |||
Fair value of derivative assets — long-term | 0.1 | — | |||||
Fair value of derivative liabilities — current | (2.9 | ) | (7.6 | ) | |||
Fair value of derivative liabilities — long-term | (0.3 | ) | — | ||||
Net fair value of derivatives | $ | (1.0 | ) | $ | (6.3 | ) |
March 31, 2017 | |||||||||||
Commodity | Instruments | Unit | Volume | Fair Value | |||||||
NGL (short contracts) | Swaps | Gallons | (32.9 | ) | $ | (0.3 | ) | ||||
NGL (long contracts) | Swaps | Gallons | 12.8 | (0.2 | ) | ||||||
Natural Gas (short contracts) | Swaps | MMBtu | (15.4 | ) | (0.3 | ) | |||||
Natural Gas (long contracts) | Swaps | MMBtu | 15.1 | (0.4 | ) | ||||||
Condensate (short contracts) | Swaps | MMbbls | — | 0.1 | |||||||
Condensate (long contracts) | Swaps | MMbbls | — | 0.1 | |||||||
Total fair value of derivatives | $ | (1.0 | ) |
|
Level 2 | |||||||
March 31, 2017 | December 31, 2016 | ||||||
Commodity Swaps (1) | $ | (1.0 | ) | $ | (6.3 | ) | |
Total | $ | (1.0 | ) | $ | (6.3 | ) |
(1) | The fair values of derivative contracts included in assets or liabilities for risk management activities represent the amount at which the instruments could be exchanged in a current arms-length transaction adjusted for our credit risk and/or the counterparty credit risk as required under ASC 820. |
March 31, 2017 | December 31, 2016 | ||||||||||||||
Carrying Value | Fair Value | Carrying Value | Fair Value | ||||||||||||
Long-term debt (1) | $ | 3,521.1 | $ | 3,543.1 | $ | 3,295.8 | $ | 3,253.6 | |||||||
Installment Payables | $ | 230.1 | $ | 232.9 | $ | 473.2 | $ | 476.6 | |||||||
Obligations under capital lease | $ | 5.1 | $ | 4.3 | $ | 6.6 | $ | 6.1 |
(1) | The carrying values of long-term debt are reduced by debt issuance costs of $23.8 million and $24.6 million at March 31, 2017 and December 31, 2016, respectively. The respective fair values do not factor in debt issuance costs. |
|
Texas | Louisiana | Oklahoma | Crude and Condensate | Corporate | Totals | ||||||||||||||||||
Three Months Ended March 31, 2017 | |||||||||||||||||||||||
Product sales | $ | 85.1 | $ | 544.5 | $ | 14.5 | $ | 345.9 | $ | — | $ | 990.0 | |||||||||||
Product sales—related parties | 106.5 | 10.2 | 64.4 | 0.8 | (139.2 | ) | 42.7 | ||||||||||||||||
Midstream services | 27.8 | 53.1 | 27.9 | 18.6 | — | 127.4 | |||||||||||||||||
Midstream services—related parties | 105.1 | 29.0 | 49.4 | 3.3 | (27.8 | ) | 159.0 | ||||||||||||||||
Cost of sales | (179.2 | ) | (564.7 | ) | (88.7 | ) | (336.7 | ) | 167.0 | (1,002.3 | ) | ||||||||||||
Operating expenses | (43.9 | ) | (25.4 | ) | (14.1 | ) | (20.7 | ) | — | (104.1 | ) | ||||||||||||
Gain on derivative activity | — | — | — | — | 2.8 | 2.8 | |||||||||||||||||
Segment profit | $ | 101.4 | $ | 46.7 | $ | 53.4 | $ | 11.2 | $ | 2.8 | $ | 215.5 | |||||||||||
Depreciation and amortization | $ | (49.8 | ) | $ | (28.1 | ) | $ | (36.5 | ) | $ | (11.5 | ) | $ | (2.4 | ) | $ | (128.3 | ) | |||||
Goodwill | $ | 232.0 | $ | — | $ | 190.3 | $ | — | $ | 1,119.9 | $ | 1,542.2 | |||||||||||
Capital expenditures | $ | 28.3 | $ | 32.7 | $ | 140.7 | $ | 37.4 | $ | 9.0 | $ | 248.1 | |||||||||||
Three Months Ended March 31, 2016 | |||||||||||||||||||||||
Product sales | $ | 62.5 | $ | 287.7 | $ | 7.8 | $ | 230.5 | $ | — | $ | 588.5 | |||||||||||
Product sales—related parties | 37.3 | 7.4 | 10.6 | 0.2 | (31.0 | ) | 24.5 | ||||||||||||||||
Midstream services | 27.4 | 55.2 | 15.1 | 16.8 | — | 114.5 | |||||||||||||||||
Midstream services—related parties | 110.3 | 12.7 | 45.0 | 5.2 | (10.6 | ) | 162.6 | ||||||||||||||||
Cost of sales | (91.3 | ) | (302.1 | ) | (19.3 | ) | (215.1 | ) | 41.6 | (586.2 | ) | ||||||||||||
Operating expenses | (39.3 | ) | (23.3 | ) | (12.8 | ) | (22.8 | ) | — | (98.2 | ) | ||||||||||||
Loss on derivative activity | — | — | — | — | (0.4 | ) | (0.4 | ) | |||||||||||||||
Segment profit (loss) | $ | 106.9 | $ | 37.6 | $ | 46.4 | $ | 14.8 | $ | (0.4 | ) | $ | 205.3 | ||||||||||
Depreciation and amortization | $ | (46.2 | ) | $ | (29.3 | ) | $ | (33.8 | ) | $ | (10.4 | ) | $ | (2.2 | ) | $ | (121.9 | ) | |||||
Impairments | $ | (473.1 | ) | $ | — | $ | — | $ | (93.2 | ) | $ | (307.0 | ) | $ | (873.3 | ) | |||||||
Goodwill | $ | 230.4 | $ | — | $ | 190.3 | $ | — | $ | 1,119.9 | $ | 1,540.6 | |||||||||||
Capital expenditures | $ | 23.3 | $ | 22.7 | $ | 69.2 | $ | 3.3 | $ | 1.9 | $ | 120.4 |
Segment Identifiable Assets: | March 31, 2017 | December 31, 2016 | |||||
Texas | $ | 3,132.6 | $ | 3,142.6 | |||
Louisiana | 2,312.7 | 2,349.3 | |||||
Oklahoma | 2,629.8 | 2,524.5 | |||||
Crude and Condensate | 861.9 | 836.8 | |||||
Corporate | 1,240.5 | 1,422.7 | |||||
Total identifiable assets | $ | 10,177.5 | $ | 10,275.9 |
Three Months Ended March 31, | |||||||
2017 | 2016 | ||||||
Segment profits | $ | 215.5 | $ | 205.3 | |||
General and administrative expenses | (36.1 | ) | (35.1 | ) | |||
Gain (loss) on disposition of assets | (5.1 | ) | 0.2 | ||||
Depreciation and amortization | (128.3 | ) | (121.9 | ) | |||
Impairments | (7.0 | ) | (873.3 | ) | |||
Gain on litigation settlement | 17.5 | $ | — | ||||
Operating income (loss) | $ | 56.5 | $ | (824.8 | ) |
|
Three Months Ended March 31, | |||||||
2017 | 2016 | ||||||
Non-cash financing activities: | |||||||
Non-cash issuance of ENLC common units (1) | $ | — | $ | 214.9 | |||
Installment payable, net of discount of $79.1 million (2) | — | 420.9 |
(1) | Non-cash ENLC common units were issued as partial consideration for the acquisition of EnLink Oklahoma T.O. assets. See “Note 3—Acquisition” for further discussion. |
(2) | ENLK incurred installment purchase obligations, net of discount, payable to the seller in connection with the EnLink Oklahoma T.O. assets. ENLK paid the first installment on January 6, 2017 and will pay the final installment no later than January 7, 2018. See “Note 3—Acquisition” for further discussion. |
|
March 31, 2017 | December 31, 2016 | ||||||
Accrued interest | $ | 58.4 | $ | 34.2 | |||
Accrued wages and benefits, including taxes | 9.2 | 19.0 | |||||
Accrued ad valorem taxes | 13.0 | 23.5 | |||||
Capital expenditure accruals | 56.3 | 64.6 | |||||
Onerous performance obligations | 15.8 | 15.9 | |||||
Other | 61.6 | 60.3 | |||||
Other current liabilities | $ | 214.3 | $ | 217.5 |
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