Enable Midstream Partners, LP

Transcription

1 Enable Midstream Partners, LP Third Quarter 2014 Conference Call November 4, 2014

2 Forward-looking Statements This presentation and the oral statements made in connection herewith may contain forward-looking statements within the meaning of the securities laws. All statements, other than statements of historical fact, regarding Enable Midstream Partners ( Enable ) 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 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 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 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 s actual results and plans could differ materially from those expressed in any forward-looking statements. 2

3 Non-GAAP Financial Measures The Partnership has included the non-gaap financial measures gross margin, Adjusted EBITDA and distributable cash flow in this presentation based on information in its condensed combined and consolidated financial statements. Gross margin, Adjusted EBITDA and distributable cash flow are supplemental financial measures that management and external users of the Partnership s financial statements, such as industry analysts, investors, lenders and rating agencies may use, to assess: The Partnership 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 the Partnership s assets to generate sufficient cash flow to make distributions to its partners; The Partnership 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. The appendix to this presentation 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, as applicable, for each of the periods indicated. The Partnership 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 the Partnership 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. 3

4 Third Quarter Financial Highlights Net income of $139 million, a 34% increase over third quarter 2013 Adjusted EBITDA of $231 million, a 13% increase over third quarter 2013 DCF of $161 million, a 20% increase over third quarter 2013 Declared distributions of $.3025/unit, a 2.5 percent increase over the prior quarter distribution on a full-quarter basis 4

5 Gathering & Processing Highlights Contracted additional acreage dedications in the SCOOP, bringing total SCOOP-area acreage dedications to approximately 1.1 million gross acres SCOOP-area dedications include dedications in the Springer Shale SCOOP-area compression now totals almost 90,000 horsepower Bradley Plant on schedule for a first quarter 2015 start-up and additional 200 MMcf/d plant on schedule for a fourth quarter 2015 start-up Volumes growing on first Bakken crude gathering system and construction completion anticipated by Q4 Over 400 rigs active in the counties in which we operate or have announced plans to operate 1 36 SCOOP-area rigs drilling wells to be connected to Enable s gathering systems 1. Rigs per Drillinginfo as of October 21,

6 Transportation & Storage Highlights Recontracting on our transportation and storage systems continues with the extension of MRT s firm transportation and storage contracts with Laclede through 2017 and 2018 at existing contract demand levels Additional end-user opportunities continue to develop on and around our pipelines, including recent announcements of new natural gas-fired power generation Growing Oklahoma production should continue to drive demand for natural gas takeaway capacity, including capacity on Enable s existing transportation systems 6

7 Third Quarter Operating Statistics Q Q Gathered volumes (TBtu/d) Natural gas processed volumes (TBtu/d) NGLs produced (MBbls/d) Condensate sold (MBbls/d) Crude Oil Gathered Volumes (MBbl/d) Transportation volumes (TBtu/d) Interstate firm contracted capacity (Bcf/d) Intrastate average deliveries (TBtu/d) Excludes condensate 2. Initial operation of our crude oil gathering system began on November 1,

8 Third Quarter Results $ in millions Q Q Gross Margin 1 $364 $333 Gathering and Processing $222 $193 Transportation and Storage $143 $141 Operation and Maintenance Expense $128 $124 Net Income 2 $139 $104 Adjusted EBITDA $231 $205 Adjusted Interest Expense, net $23 $17 Maintenance Capital $47 $54 Distributable Cash Flow $161 $134 Expansion Capital $205 $ Gross margin includes a ($1) million elimination in both Q and Q Net income attributable to Enable Midstream Partners, LP 8

9 2014 and 2015 Outlook Reaffirming previously announced EBITDA, DCF and per-unit distribution growth outlook for 2014 and 2015 Growth Capital Outlook $ in millions Total Contracted Expansion $675 $725 $800 $1,000 $700 $1,000 $2,175 $2,725 Identified Opportunities $20 $25 $225 $425 $800 $1,000 $1,045 $1,450 Total $695 $750 $1,025 1,425 $1,500 $2,000 $3,220 $4,175 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 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 9 Note: See the partnership s second quarter 2014 earnings press release for other key factors and assumptions underlying its 2014 and 2015 EBITDA, DCF and per-unit distribution growth outlook.

10 Commodity Exposure Enable targets fee-based contracts on a firm basis, when possible Some gathering and processing contracts have provisions to protect against low commodity price environments and volume decreases Commodity sensitivities: A 10% increase or decrease in the price of natural gas from forecasted levels would result in an increase or decrease of approximately $20 million (~1%) in gross margin in 2015 A 10% increase or decrease in the price of NGLs and condensate from forecasted levels would result in an increase or decrease of approximately $15 million (~1%) in gross margin in 2015 Fee-Based Margin Profile for 9 Months Ending 9/30/ % 51% Firm/MVC Fee-based Other Fee-based Commodity-based 21% ~72% fee-based Percentages in pie charts based on Gross Margin contribution.

11 Producer Activity and IRRs Breakeven prices are lower than current market prices in Enable s growth areas Not seeing any producer pullback in the SCOOP or Bakken Enable is in constant discussions with producers to understand drilling plans and associated impacts to capital projects Internal Rate of Return Sensitivity for Major Plays 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% $ $80.00 $60.00 Price Assumptions: Gas = $4.00; NGL s = 40% of Oil Price Source: Bentek 11

12 Key Takeaways Significant fee-based business Producer activity remains strong in the SCOOP and Bakken SCOOP-area investments continue to pay dividends with additional acreage dedications contracted during the quarter Continued recontracting of transportation and storage capacity Growing producer supply and end-user demand support fundamentals of transportation and storage business 12

13 13 Question and Answer

14 14 Appendix

15 Non-GAAP Reconciliations Historical Pro Forma 9 Months Ended September 30, Revenues ,632 1,665 2,296 Cost of goods sold, excluding depreciation and amortization , ,312 Gross Margin , Net income attributable to Enable Midstream Partners, LP , Add: Depreciation and amortization expense Interest expense, net of interest income Income tax expense (benefit) (1,195) 1 EBITDA Add: Loss on extinguishment of debt 4 Distributions from equity method affiliates Other non-cash losses Impairment Less: Other non-cash gains (9) (9) Equity in earnings of equity method affiliates (5) (3) (12) (12) (9) Gain on disposition (10) Adjusted EBITDA Less: 3 Months Ended September 30, 9 Months Ended September 30, Adjusted interest expense, net 2 (23) (17) (60) (51) (44) Maintenance capital expenditures (47) (54) (107) (117) (127) Distributable cash flow