News Column

Enable Midstream Partners, LP Reports Second Quarter 2014 Financial Results

August 5, 2014

  • Distributable cash flow increases 17 percent compared to pro forma second quarter 2013
  • Distributions of $.2464/unit or $.2950/unit on a full-quarter basis, a 2.6 percent increase over the minimum quarterly distribution
  • NGL production increases 19 percent compared to pro forma second quarter 2013
  • Extends multiple firm transportation contracts on EGT with volumes of over 200,000 dekatherms per day

    OKLAHOMA CITY--(BUSINESS WIRE)-- Enable Midstream Partners, LP (NYSE: ENBL) today announced financial results for second quarter 2014. The Partnership’s Adjusted EBITDA for second quarter 2014 was $211 million, an increase of $13 million, or 7 percent, compared to $198 million for pro forma second quarter 2013.

    Distributable cash flow (DCF) for second quarter 2014 was $159 million, an increase of $23 million, or 17 percent, compared to $136 million for pro forma second quarter 2013.

    Operating income for second quarter 2014 was $138 million, an increase of $16 million, or 13 percent, compared to $122 million for pro forma second quarter 2013. Net income attributable to the Partnership was $120 million for second quarter 2014 compared to $1.35 billion for pro forma second quarter 2013. Pro forma second quarter 2013 net income was impacted by the recognition of $1.24 billion of outstanding current income tax liabilities and deferred income tax assets and liabilities as a result of the conversion to a partnership.

    Pro forma second quarter 2013 results are included in this press release to provide the basis for comparison of quarterly results since second quarter 2013 historical results do not include Enogex LLC for the month of April 2013.

    MANAGEMENT PERSPECTIVE

    “During the second quarter, we saw continued rich gas volume growth from strong producer activity in the Anadarko basin, particularly in the SCOOP play,” said Lynn Bourdon, Enable Midstream’s CEO. Bourdon added that demand also remains strong for Enable’s natural gas transportation pipelines with over 200,000 dekatherms per day of firm transportation capacity renewed on the EGT system during the quarter.

    “As we move forward, we plan to execute on our growth plans and deliver superior unitholder returns while remaining focused on our values of safety, integrity, customer service, accountability and teamwork,” he said.

    FINANCING HIGHLIGHTS

    In May, Enable issued $1.65 billion of senior notes, establishing benchmark securities in the 5, 10 and 30-year space with a weighted-average coupon of 3.8% across all maturities. The offering was used to refinance outstanding term loans and pre-fund a scheduled July maturity of senior notes. The $1.65 billion debt offering followed the successful initial public offering in April of $575 million in common units, including the underwriters’ exercise of their over-allotment option.

    As of June 30, 2014, the partnership had access to $1.4 billion of available capacity under its revolving credit facility.

    ADDITIONAL BUSINESS HIGHLIGHTS

    Producer activity remains strong around Enable’s footprint. Based on rig estimates from Drillinginfo, approximately 400 rigs were active in the counties in which Enable operates or has announced plans to operate as of July 27, 2014. Enable also continues to contract additional acreage dedications with SCOOP-area acreage dedications now totaling approximately 1 million gross acres.

    To accommodate increased rich gas production, Enable continues to invest in processing infrastructure. During the quarter, the Clinton Plant was connected to the super-header processing system, increasing system flexibility and enhancing optimization opportunities. Enable also recently announced upgrades to the Cox City Plant which will improve efficiencies and better serve SCOOP-area producers.

    In the Transportation and Storage segment, Enable Oklahoma Intrastate Transmission, LLC signed a long-term firm transportation contract to serve Grand River Dam Authority’s planned 495-megawatt combined cycle power plant. Enable also acquired an additional 24.95% interest in SESH from CenterPoint Energy during the quarter which is projected to be accretive to DCF and per-unit distributions

    KEY OPERATING STATISTICS

    Natural gas gathering volumes were 3.41 TBtu/d in the second quarter of 2014, a decrease of 5 percent compared to 3.58 TBtu/d for pro forma second quarter 2013. The decrease in gathering volumes is due primarily to lower gathering volumes on the Ark-La-Tex and Arkoma systems partially offset by higher gathering volumes on the Anadarko system resulting from increased production from the liquids-rich SCOOP and Mississippi Lime plays. Much of the decrease on the Ark-La-Tex and Arkoma systems will be offset by payments under minimum volume commitment contracts.

    Natural gas processed volumes were 1.55 TBtu/d in the second quarter of 2014, an increase of 9 percent compared to 1.42 TBtu/d for pro forma second quarter 2013. The increase in volumes is primarily related to processed volume growth on the Anadarko system, including growth from the SCOOP and Mississippi Lime plays.

    Gross NGL production was 69.5 MBbl/d in the second quarter of 2014, an increase of 19 percent compared to 58.2 MBbl/d for pro forma second quarter 2013 volumes. The increase in volumes is primarily related to Anadarko processed volume growth, including rich gas growth from the SCOOP and Mississippi Lime plays.

    Crude oil gathered volumes were 1.6 MBbl/d in the second quarter of 2014. Enable Midstream’s first crude gathering system commenced initial operations in November 2013.

    Interstate transportation firm contracted capacity was 7.63 Bcf/d in the second quarter of 2014, a decrease of less than 1 percent compared to 7.69 Bcf/d for pro forma second quarter 2013.

    Intrastate transportation average throughput was 1.63 TBtu/d in the second quarter of 2014, an increase of 11 percent compared to 1.47 TBtu/d for pro forma second quarter 2013. The increase in throughput is primarily related to higher demand for off-system transportation services.

    SECOND-QUARTER FINANCIAL PERFORMANCE

    Gross margin was $349 million for second quarter 2014, an increase of $22 million compared to $327 million for pro forma second quarter 2013. Gathering and Processing gross margin was $203 million for second quarter 2014, an increase of $12 million compared to $191 million for pro forma second quarter 2013. The increase in Gathering and Processing gross margin is primarily a result of higher gathering and processing volumes on the Anadarko system. Transportation and Storage gross margin was $146 million for second quarter 2014, an increase of $10 million compared to $136 million for pro forma second quarter 2013. The increase in Transportation and Storage gross margin is primarily a result of increased off-system transportation revenues, higher rates on transportation services for local distribution companies and increased other firm transportation revenues.

    Operation and maintenance expense was $129 million for second quarter 2014, an increase of $4 million compared to $125 million for pro forma second quarter 2013. The increase in operation and maintenance expense is primarily due to the costs incurred to operate as a standalone company and to new assets placed into service.

    Depreciation and amortization expense was $69 million for second quarter 2014, an increase of $3 million compared to $66 million for pro forma second quarter 2013. The increase in depreciation and amortization expense is primarily due to additional assets placed into service, including the McClure Plant and the Bakken crude oil gathering system.

    Taxes other than income taxes were $13 million for second quarter 2014, a decrease of $1 million compared to $14 million for pro forma second quarter 2013. The decrease in taxes other than income taxes is primarily due to lower ad valorem tax assessments partially offset by new assets placed into service

    Interest expense, net was $16 million for second quarter 2014, an increase of $3 million compared to $13 million for pro forma first quarter 2013. The increase in interest expense, net is primarily due to higher debt balances.

    Capital expenditures were $189 million for second quarter 2014, compared to $163 million for pro forma second quarter 2013. Expansion capital expenditures were $156 million for second quarter 2014, compared to $118 million for pro forma second quarter 2013. Maintenance capital expenditures were $33 million for second quarter 2014, compared to $45 million for pro forma second quarter 2013.

    OUTLOOK

    The partnership’s outlook for its volumes, distributable cash flow and per-unit distributions are displayed in the table below:

     
    $ in millions, except volume numbers   2014     2015
           
    Natural Gas Gathered Volumes (TBtu/d) 3.3 - 3.5 3.5 - 3.7
    Natural Gas Processed Volumes (TBtu/d) 1.5 - 1.7 1.9 - 2.2
    Crude Oil – Gathered Volumes (MBbl/d) 3.5 - 5.5 22.0 - 28.0
    Adjusted EBITDA $850 - $890$915 - $985
    Adjusted Interest Expense, net $80 - $90$100 - $110
    Maintenance Capital$175 - $190$175 - $190
    Distributable Cash Flow$590 - $610$630 - $690
    Per-unit Distributions Targeting 10% – 12% CAGR
    Coverage Ratio Approximately 1.10x – 1.20x
     

    Guidance centered around the following price assumptions:

    • Natural Gas (Henry Hub) at $4.39/MMBtu in 2014 and $3.89 in 2015

    • Natural Gas Liquids Composite

    Mont Belvieu, Texas at $.87/gal in 2014 and $.83/gal in 2015

    Conway, Kansas at $.88/gal in 2014 and $.80/gal in 2015

    • Natural gas liquids composite based on an assumed composition of 45%, 30%, 10%, 5%, and 10% for ethane, propane, normal butane, isobutane and natural gasoline, respectively.

    • Crude Oil (WTI) at $100/Bbl in 2014 and $96/Bbl in 2015

     
     


    The partnership’s expectations for its expansion capital expenditures are displayed in the table below:

    $ in millions     2014     2015     2016-2017     Total
               
    Contracted Expansion(1)$725 - $775$800 - $1,000$700 - $1,000$2,225 - $2,775
    Identified Opportunities(2)$25 - $75$225 - $425$800 - $1,000$1,050 - $1,500
    Total $750 - $850$1,025 - $1,425$1,500 - $2,000$3,275 - $4,275
     

    1. Contracted Expansion includes gathering, compression and processing infrastructure to support projected volume growth from current contracts and acreage dedications, including infrastructure in the SCOOP, Bakken, Greater Granite Wash and Cotton Valley plays

    2. Identified Opportunities include:

    • Transportation and G&P projects in late-stage negotiation

    • Additional Bakken crude gathering expansions and Bakken gas gathering and processing

    Anadarko gas gathering and processing expansions and Anadarko crude gathering

    • Transportation projects, including new end-user service and market access pipeline opportunities

     
     
     


    EARNINGS CONFERENCE CALL AND WEBCAST

    A conference call discussing second quarter results is scheduled today at 9:00 a.m. Eastern. The dial-in number to access the conference call is 866-952-1908 and the conference call ID is ENBLQ214. Investors may also listen to the call via the partnership’s website at http://investors.enablemidstream.com/. Replays of the conference call will be available on the partnership’s website.

    ABOUT ENABLE MIDSTREAM PARTNERS

    Enable Midstream owns, operates and develops strategically located natural gas and crude oil infrastructure assets. The company’s assets include approximately 11,000 miles of gathering pipelines, 12 major processing plants with approximately 2.1 billion cubic feet per day of processing capacity, approximately 7,900 miles of interstate pipelines (including Southeast Supply Header, LLC of which the company owns 49.90 percent), approximately 2,300 miles of intrastate pipelines and eight storage facilities comprising 86.5 billion cubic feet of storage capacity. For more information visit EnableMidstream.com.

    NON-GAAP FINANCIAL MEASURES

    Enable Midstream has included the non-GAAP financial measures gross margin, Adjusted EBITDA and distributable cash flow in this press release based on information in its financial statements.

    Gross margin, Adjusted EBITDA and distributable cash flow are supplemental financial measures that management and external users of Enable Midstream’s financial statements, such as industry analysts, investors, lenders and rating agencies may use, to assess:

  • Enable Midstream’s operating performance as compared to those of other publicly traded partnerships in the midstream energy industry, without regard to capital structure or historical cost basis;
  • The ability of Enable Midstream’s assets to generate sufficient cash flow to make distributions to its partners;
  • Enable Midstream’s ability to incur and service debt and fund capital expenditures; and
  • The viability of acquisitions and other capital expenditure projects and the returns on investment of various investment opportunities.

    This press release includes a reconciliation of gross margin to revenues, Adjusted EBITDA and distributable cash flow to net income attributable to controlling interest, and Adjusted EBITDA to net cash provided by operating activities, the most directly comparable GAAP financial measures, on a historical basis and pro forma basis, as applicable, for each of the periods indicated. Enable Midstream believes that the presentation of gross margin, Adjusted EBITDA and distributable cash flow provides information useful to investors in assessing its financial condition and results of operations. Gross margin, Adjusted EBITDA and distributable cash flow should not be considered as alternatives to net income, operating income, revenue, cash from operations or any other measure of financial performance or liquidity presented in accordance with GAAP. Gross margin, Adjusted EBITDA and distributable cash flow have important limitations as an analytical tool because they exclude some but not all items that affect the most directly comparable GAAP measures. Additionally, because gross margin, Adjusted EBITDA and distributable cash flow may be defined differently by other companies in Enable Midstream’s industry, its definitions of gross margin, Adjusted EBITDA and distributable cash flow may not be comparable to similarly titled measures of other companies, thereby diminishing their utility.

    FORWARD-LOOKING STATEMENTS

    This press release may contain “forward-looking statements” within the meaning of the securities laws. All statements, other than statements of historical fact, regarding Enable Midstream Partners’ strategy, future operations, financial position, estimated revenues, projected costs, prospects, plans and objectives of management are forward-looking statements. These statements often include the words “could,” “believe,” “anticipate,” “intend,” “estimate,” “expect,” “project,” “forecast” and similar expressions and are intended to identify forward-looking statements, although not all forward-looking statements contain such identifying words. These forward-looking statements are based on Enable Midstream’s current expectations and assumptions about future events and are based on currently available information as to the outcome and timing of future events. Enable Midstream assumes no obligation to and does not intend to update any forward-looking statements included herein. When considering forward-looking statements, you should keep in mind the risk factors and other cautionary statements described under the heading “Risk Factors” included in our SEC filings. Enable Midstream cautions you that these forward-looking statements are subject to all of the risks and uncertainties, most of which are difficult to predict and many of which are beyond its control, incident to the ownership, operation and development of natural gas and crude oil infrastructure assets. These risks include, but are not limited to, contract renewal risk, commodity price risk, environmental risks, operating risks, regulatory changes and the other risks described under “Risk Factors” in our SEC filings. Should one or more of these risks or uncertainties occur, or should underlying assumptions prove incorrect, Enable Midstream’s actual results and plans could differ materially from those expressed in any forward-looking statements.

             
    Enable Midstream Partners, LP
    Condensed Combined and Consolidated Statements of Income
    (unaudited)
       
    Historical
    Three Months Ended June 30,Six Months Ended June 30,
    2014201320142013
    (In millions)
     
    Revenues $ 827 $ 612 $ 1,829 $ 873
    Cost of Goods Sold, excluding depreciation and amortization 478 323 1,111 368
     
    Operating Expenses:
    Operation and maintenance 129 109 255 178
    Depreciation and amortization 69 51 136 81
    Taxes other than income taxes   13     13     27     22  
    Total Operating Expenses   211     173     418     281  
    Operating Income   138     116     300     224  
     
    Other Income (Expense):
    Interest expense (16 ) (16 ) (30 ) (40 )
    Equity in earnings of equity method affiliates 4 4 7 9
    Interest income - affiliated companies - 1 - 8
    Other, net   (5 )   -     (5 )   -  
    Total Other Income (Expense)   (17 )   (11 )   (28 )   (23 )
     
    Income Before Income Taxes 121 105 272 201
    Income tax expense (benefit)   -     (1,233 )   1     (1,196 )
    Net Income $ 121 $ 1,338 271 1,397
    Less: Net income attributable to noncontrolling interest   1     1     2     1  
     
    Net Income attributable to Enable Midstream Partners, LP $ 120   $ 1,337   $ 269   $ 1,396  
               
    Enable Midstream Partners, LP
    Non-GAAP Financial Measures
       
    Historical
    Three Months Ended June 30,Six Months Ended June 30,
    2014201320142013
    (In millions)
    Reconciliation of gross margin to revenues:
    Revenues $ 827 $ 612 $ 1,829 $ 873
    Cost of Goods Sold, excluding depreciation and amortization   478     323     1,111     368  
    Gross margin $ 349 $ 289 $ 718 $ 505
     

    Reconciliation of Adjusted EBITDA and distributable cash flow to net income attributable to controlling interest:

    Net income attributable to controlling interest $ 120 $ 1,337 $ 269 $ 1,396
    Add:
    Depreciation and amortization expense 69 51 136 81
    Interest expense, net of interest income 16 15 30 32
    Income tax expense   -     (1,233 )   1     (1,196 )
    EBITDA $ 205 $ 170 $ 436 $ 313
    Add:
    Loss on extinquishment of debt 4 - 4 -
    Distributions from equity method affiliates (1) 4 8 6 17
    Other non-recurring losses 2 3 - 3
    Less:
    Equity in earnings of equity method affiliates (4 ) (4 ) (7 ) (9 )
    Gain on disposition   -     -     -     -  
    Adjusted EBITDA $ 211 $ 177 $ 439 $ 324
    Less:
    Adjusted interest expense, net (2) (19 ) (18 ) (37 ) (34 )
    Maintenance capital expenditures   (33 )   (41 )   (60 )   (63 )
    Distributable cash flow $ 159   $ 118   $ 342   $ 227  
           
    (1) Excludes $198 million in distributions of investment in equity method affiliates for the three and six month period ended June 30, 2014.

    (2) Adjusted interest expense, net excludes the effect of the amortization of the premium on Enogex's fixed rate senior notes. This exclusion is the primary reason for the difference between "Interest expense, net" and "Ajdusted interest expense, net."

               
    Enable Midstream Partners, LP
    Non-GAAP Financial Measures (continued)
         
    Historical
    Three Months Ended June 30,Six Months Ended June 30,
    2014201320142013
    (In millions)

    Reconciliation of Adjusted EBITDA to net cash provided by operating activities:

    Net cash provided by operating activities $ 186 $ 165 $ 292 $ 288
    Interest expense, net of interest income 16 15 30 32
    Net (income) loss attributable to noncontrolling interest (1 ) (1 ) (2 ) (1 )
    Income tax expense - (1,233 ) 1 (1,196 )
    Deferred income tax (expense) benefit 2 1,233 1 1,195
    Equity in earnings of equity method affiliates (net of distributions) (1) - (4 ) 1 (8 )
    Other non-cash items (10 ) 2 (6 ) (1 )
    Changes in operating working capital which (provided) used cash:
    Accounts receivable (20 ) (7 ) 31 18
    Accounts payable 40 7 101 9
    Other, including changes in non-current assets and liabilities   (8 )   (7 )   (13 )   (23 )
    EBITDA $ 205 $ 170 $ 436 $ 313
    Add:
    Loss on extinguishment of debt 4 - 4 -
    Distributions from equity method affiliates 4 8 6 17
    Other non-recurring losses 2 3 - 3
    Less:
    Equity in earnings of equity method affiliates   (4 )   (4 )   (7 )   (9 )
    Adjusted EBITDA $ 211   $ 177   $ 439   $ 324  
         
    (1) Excludes $198 million in distributions of investment in equity method affiliates for the three and six month period ended June 30, 2014.
               
    Enable Midstream Partners, LP
    Operating Data
       
     
     
    Historical
    Three Months Ended June 30,Six Months Ended June 30,
    2014201320142013
     
    Operational Data
     
    Natural Gas - Gathered volumes - TBtu 312 281 607 476
    Natural Gas - Gathered volumes - TBtu/d 3.41 3.07 3.35 2.62
    Natural gas processed volumes - TBtu 141 98 272 127
    Natural gas processed volumes - TBtu/d 1.55 1.07 1.50 0.70
    NGLs produced - MBbls/d(1) (3) 69.47 42.95 67.39 26.60
    NGLs sold - MBbls/d(1) (3) 73.75 43.50 69.98 26.88
    Condensate sold - MBbls/d 4.28 2.00 4.71 1.06
    Crude Oil - Gathered volumes - MBbl/d(2) 1.59 - 1.30 -
    Transported volumes - TBtu 456 399 955 766
    Transported volumes - TBtu/d 4.97 4.34 5.26 4.21
    Interstate firm contracted volumes - TBtu/d 7.63 7.69 7.83 7.83
    Intrastate Transported volumes - TBtu/d 1.63 0.96 1.60 0.48
           
    (1) Excludes Condensate.
    (2) Initial operation of the system began on November 1, 2013.
    (3) NGLs sold includes volumes of NGLs withdrawn from inventory or purchased for system balancing purposes.
           
    Enable Midstream Partners, LP
    Supplemental Disclosures
       
    Certain information contained in this release relates to periods that began prior to the acquisition of Enogex LLC (Enogex) by Enable Midstream Partners, LP. The Partnership believes that combined historical data with Enogex, along with certain pro forma adjustments, is relevant and meaningful, enhances the discussion of periods presented and is useful to the reader to better understand trends in the Partnership's operations. The pro forma adjustments, as discussed in the footnotes below, only give effect to events that are (1) directly attributable to the formation of the Partnership; (2) factually supportable; and (3) expected to have a continuing effect on the consolidated results of the Partnership.
     
     

    The following information is for informational purposes only and should not be considered indicative of future results. The following pro forma financial data was derived from the Partnership's combined financial information, Enogex consolidated financial information and certain adjustments described below. Further, management does not believe that the pro forma financial data is necessarily indicative of the financial data that would have been reported by the Partnership had the acquisition of Enogex closed prior to the historical period presented, future results of the Partnership, or other transactions that resulted in the formation of the Partnership.

     
     
    Enable Midstream Partners, LP
    Unaudited Supplemental Pro Forma Condensed Combined Statement of Income
    For the Three Months Ended June 30, 2013
     
     
    Enable Midstream Partners, LPEnogexPro FormaEnable Midstream Partners, LP
    HistoricalHistoricalAdjustmentsPro Forma
    (In millions)
     
    Revenues $ 612 $ 166 $ - $ 778

    Cost of Goods Sold, excluding depreciation and amortization

    323 129 (1 ) A 451
     
    Operating Expenses:
    Operation and maintenance 109 16 - 125
    Depreciation and amortization 51 10 5 A 66
    Taxes other than income taxes   13     1     -     14  
    Total Operating Expenses   173     27     5     205  
    Operating Income   116     10     (4 )   122  
     
    Other Income (Expense):
    Interest expense (16 ) (2 ) (2 ) C (13 )
    1 A
    6 B
     
    Equity in earnings of equity method affiliates 4 - (2 ) E 2
    Interest income - affiliated companies 1 - (1 ) B -
    Other, net   -     1     -     1  
    Total Other Income (Expense)   (11 )   (1 )   2     (10 )
     
    Income Before Income Taxes 105 9 (2 ) 112
    Income tax expense (benefit)   (1,233 )   -     (5 ) D   (1,238 )
    Net Income $ 1,338 $ 9 $ 3 $ 1,350
    Less: Net income attributable to

    noncontrolling interest

      1     -     -     1  

    Net Income attributable to Enable Midstream Partners, LP

    $ 1,337   $ 9   $ 3   $ 1,349  
     
    Enable Midstream Partners, LP
    Supplemental Disclosures (continued)
     
     
    (A) This adjustment reflects the acquisition of Enogex on May 1, 2013:
     
    Cost of Goods Sold, Excluding Depreciation and Amortization. The impact of recognizing liabilities for loss contract at May 1, 2013 results in a reduction to cost of goods sold, excluding depreciation and amortization, of $1 million during the three months ended June 30, 2013.
     
    Depreciation and Amortization. As a result of applying purchase accounting to the acquisition of Enogex, property, plant and equipment and identifiable intangible assets were recorded at their fair value, resulting in additional depreciation and amortization expense. The impact of the step-up on depreciation expense is $5 million during the three months ended June 30, 2013.
     
    Interest Expense. The pro forma impact of the amortization of the premium, less the historical recognition of the premium, discount and deferred charges on interest expense, net of historical capitalized interest, is $1 million during the three months ended June 30, 2013.
     
    (B) Interest Expense. This adjustment reflects the settlement on May 1, 2013 of certain notes receivable—affiliated companies and notes payable—affiliated companies with CenterPoint Energy and OGE Energy, historically held by the Partnership and Enogex, respectively, by a total of $5 million during the three months ended June 30, 2013.
     
    (C) Interest Expense. This adjustment reflects the entrance into the $1.05 billion Term Loan Facility on May 1, 2013: this issuance results in an increase in interest expense of $2 million during the three months ended June 30, 2013.
     
    (D) Income Tax Expense. Upon conversion to a limited partnership on May 1, 2013, the Partnership’s earnings are no longer subject to income tax (other than Texas state margin taxes) and are taxable at the individual partner level. The pro forma adjustment to income taxes for the three months ended June 30, 2013 removes $5 million of historical income tax expense.
     
    (E) Equity in earnings of equity method affiliates. The 25.05% interest in SESH distributed to CenterPoint Energy results in a pro forma reduction to earnings of equity method affiliates of $2 million during the three months ended June 30, 2013.
             
    Enable Midstream Partners, LP
    Unaudited Supplemental Pro Forma Condensed Combined Statement of Income
    For the Six Months Ended June 30, 2013
     
     
    Enable Midstream Partners, LPEnogexPro FormaEnable Midstream Partners, LP
    HistoricalHistoricalAdjustmentsPro Forma
    (In millions)
     
    Revenues $ 873 $ 630 $ 1 A $ 1,504

    Cost of Goods Sold, excluding depreciation and amortization

    368 489 (4 ) A 853
     
    Operating Expenses:
    Operation and maintenance 178 63 - 241
    Depreciation and amortization 81 37 20 A 138
    Taxes other than income taxes   22     8     -     30  
    Total Operating Expenses   281     108     20     409  
    Operating Income   224     33     (15 )   242  
     
    Other Income (Expense):
    Interest expense (40 ) (11 ) (7 ) C (25 )
    4 A
    29 B
     
    Equity in earnings of equity method affiliates 9 - (4 ) E 5
    Interest income - affiliated companies 8 - (8 ) B -
    Other, net   -     10     -     10  
    Total Other Income (Expense)   (23 )   (1 )   14     (10 )
     
    Income Before Income Taxes 201 32 (1 ) 232
    Income tax expense (benefit)   (1,196 )   -     (42 ) D   (1,238 )
    Net Income $ 1,397 $ 32 $ 41 $ 1,470
    Less: Net income attributable to

    noncontrolling interest

      1     -     -     1  

    Net Income attributable to Enable Midstream Partners, LP

    $ 1,396   $ 32   $ 41   $ 1,469  
     
    Enable Midstream Partners, LP
    Supplemental Disclosures (continued)
     
     
    (A) This adjustment reflects the acquisition of Enogex on May 1, 2013:
     
    Revenue. The impact of removing the historical amortization and the historical recognition of deferred revenues at May 1, 2013 results in a net increase to revenue of $1 million during the six months ended June 30, 2013.
     
    Cost of Goods Sold, Excluding Depreciation and Amortization. The impact of recognizing liabilities for loss contract at May 1, 2013 results in a reduction to cost of goods sold, excluding depreciation and amortization, of $4 million during the six months ended June 30, 2013.
     
    Depreciation and Amortization. As a result of applying purchase accounting to the acquisition of Enogex, property, plant and equipment and identifiable intangible assets were recorded at their fair value, resulting in additional depreciation and amortization expense. The impact of the step-up on depreciation expense is $20 million during the six months ended June 30, 2013.
     
    Interest Expense. The pro forma impact of the amortization of the premium, less the historical recognition of the premium, discount and deferred charges on interest expense, net of historical capitalized interest, is $4 million during the six months ended June 30, 2013.
     
    (B) Interest Expense. This adjustment reflects the settlement on May 1, 2013 of certain notes receivable—affiliated companies and notes payable—affiliated companies with CenterPoint Energy and OGE Energy, historically held by the Partnership and Enogex, respectively, by a total of $21 million during the six months ended June 30, 2013.
     
    (C) Interest Expense. This adjustment reflects the entrance into the $1.05 billion Term Loan Facility on May 1, 2013: this issuance results in an increase in interest expense of $7 million during the six months ended June 30, 2013.
     
    (D) Income Tax Expense. Upon conversion to a limited partnership on May 1, 2013, the Partnership’s earnings are no longer subject to income tax (other than Texas state margin taxes) and are taxable at the individual partner level. The pro forma adjustment to income taxes for the six months ended June 30, 2013 removes $42 million of historical income tax expense.
     
    (E) Equity in earnings of equity method affiliates. The 25.05% interest in SESH distributed to CenterPoint Energy results in a pro forma reduction to earnings of equity method affiliates of $4 million during the six months ended June 30, 2013.
               
    Enable Midstream Partners, LP
    Supplemental Condensed Combined and Consolidated Statements of Income
    (unaudited)
       
     
    Three Months Ended June 30,Six Months Ended June 30,
    HistoricalPro FormaHistoricalPro Forma
    2014201320142013
    (In millions)
     
    Revenues $ 827 $ 778 $ 1,829 $ 1,504
    Cost of Goods Sold, excluding depreciation and amortization 478 451 1,111 853
     
    Operating Expenses:
    Operation and maintenance 129 125 255 241
    Depreciation and amortization 69 66 136 138
    Taxes other than income taxes   13     14     27     30  
    Total Operating Expenses   211     205     418     409  
    Operating Income   138     122     300     242  
     
    Other Income (Expense):
    Interest expense (16 ) (13 ) (30 ) (25 )
    Equity in earnings of equity method affiliates 4 2 7 5
    Interest income - affiliated companies - - - -
    Other, net   (5 )   1     (5 )   10  
    Total Other Income (Expense)   (17 )   (10 )   (28 )   (10 )
     
    Income Before Income Taxes 121 112 272 232
    Income tax expense (benefit)   -     (1,238 )   1     (1,238 )
    Net Income $ 121 $ 1,350 271 1,470
    Less: Net income attributable to noncontrolling interest   1     1     2     1  
    Net Income attributable to Enable Midstream Partners, LP $ 120   $ 1,349   $ 269   $ 1,469  
             
    Enable Midstream Partners, LP
    Supplemental Non-GAAP Financial Measures
       
     
    Three Months Ended

    June 30,

    Six Months Ended

    June 30,

    HistoricalPro FormaHistoricalPro Forma
    2014201320142013
    (In millions)
    Reconciliation of gross margin to revenues:
    Revenues $ 827 $ 778 $ 1,829 $ 1,504
    Cost of Goods Sold, excluding depreciation and amortization   478     451     1,111     853  
    Gross margin $ 349 $ 327 $ 718 $ 651

    Reconciliation of Adjusted EBITDA and distributable cash flow to net income attributable to controlling interest:

     
    Net income attributable to controlling interest $ 120 $ 1,349 $ 269 $ 1,469
    Add:
    Depreciation and amortization expense 69 66 136 138
    Interest expense, net of interest income 16 13 30 25
    Income tax expense   -     (1,238 )   1     (1,238 )
    EBITDA $ 205 $ 190 $ 436 $ 394
    Add:
    Loss on extinquishment of debt 4 - 4 -
    Distributions from equity method affiliates (1) 4 8 6 12
    Other non-recurring losses 2 2 - 6
    Less:
    Equity in earnings of equity method affiliates (4 ) (2 ) (7 ) (5 )
    Gain on disposition   -     -     -     (10 )
    Adjusted EBITDA $ 211 $ 198 $ 439 $ 397
    Less:
    Adjusted interest expense, net (2) (19 ) (17 ) (37 ) (30 )
    Expansion capital expenditures (122 ) (23 ) (122 ) (23 )
    Maintenance capital expenditures   (33 )   (45 )   (60 )   (73 )
    Distributable cash flow $ 159   $ 136   $ 342   $ 294  
         
    (1) Excludes $198 million in distributions of investment in equity method affiliates for the three and six month period ended June 30, 2014.

    (2) Adjusted interest expense, net excludes the effect of the amortization of the premium on Enogex's fixed rate senior notes. This exclusion is the primary reason for the difference between "Interest expense, net" and "Ajdusted interest expense, net."

             
    Enable Midstream Partners, LP
    Supplemental Operating Data
       
     
     
    Three Months Ended June 30,Six Months Ended June 30,
    HistoricalPro FormaHistoricalPro Forma
    2014201320142013
     
    Operational Data
     
    Natural Gas - Gathered volumes - TBtu 312 328 607 661
    Natural Gas - Gathered volumes - TBtu/d 3.41 3.58 3.35 3.63
    Natural gas processed volumes - TBtu 141 130 272 255
    Natural gas processed volumes - TBtu/d 1.55 1.42 1.50 1.40
    NGLs produced - MBbls/d(1) (3) 69.47 58.19 67.39 56.71
    NGLs sold - MBbls/d(1) (3) 73.75 58.72 69.98 56.95
    Condensate sold - MBbls/d 4.28 3.23 4.71 3.24
    Crude Oil - Gathered volumes - MBbl/d(2) 1.59 - 1.30 -
    Transported volumes - TBtu 456 445 955 961
    Transported volumes - TBtu/d 4.97 4.85 5.26 5.29
    Interstate firm contracted volumes - TBtu/d 7.63 7.69 7.83 7.83
    Intrastate Transported volumes - TBtu/d 1.63 1.47 1.60 1.56
         
    (1) Excludes Condensate.
    (2) Initial operation of the system began on November 1, 2013.
    (3) NGLs sold includes volumes of NGLs withdrawn from inventory or purchased for system balancing purposes.





    Enable Midstream Partners, LP

    Media:

    Brian Alford, 405-553-6984

    or

    Investor:

    Matt Beasley, 405-558-4600

    Source: Enable Midstream Partners, LP


  • For more stories on investments and markets, please see HispanicBusiness' Finance Channel



    Source: Business Wire


    Story Tools






    HispanicBusiness.com Facebook Linkedin Twitter RSS Feed Email Alerts & Newsletters