Enable Midstream Partners, LP Second Quarter 2015 Conference Call August 5, 2015
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
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 analytical tools 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
Enable Midstream Highlights Announced a second quarter 2015 distribution of $0.316/unit 1.1% increase over the first quarter 2015 distribution 10% increase over the partnership s minimum quarter distribution Reaffirming 2015 distribution growth guidance and announcing guidance for continued distribution growth through 2017 Strong demand from producers, end users and marketers continues to drive new midstream infrastructure investments Announcing the Wildhorse plant, a new 200 MMcf/d natural gas processing facility to be located in Garvin County, Oklahoma Announcing an Enable Gas Transmission (EGT) system expansion involving new shipper commitments from the EGT open season in excess of 175,000 dekatherms per day (Dth/d) 4
Anadarko Gathering and Processing Highlights Enable has a strong Anadarko basin footprint covering a number of key active plays, including the SCOOP, STACK, Cana Woodford, Cleveland Sands, Tonkawa, Marmaton and Mississippi Lime plays Anadarko Basin Footprint, Current Activity and Key Plays * Wildhorse Plant 5 * Rig data per Drillinginfo as of July 31, 2015
Anadarko Gathering and Processing Highlights The South Central Oklahoma Oil Province (SCOOP) remains a strong, active play Currently, 15 rigs are active in the SCOOP drilling wells to be connected to Enable s gathering systems Gathered volumes have grown to approximately 500 MMcf/d in the area and strong well results continue with Continental s Poteet project producing a peak production rate of 147 MMcf/d from 10 wells 1 on a single pad 6 $41 billion expected to be spent by producers in the area through 2025 2 that continues to drive infrastructure investments Constructing the Wildhorse Plant, a new 200 MMcf/d natural gas processing plant in Garvin County, Oklahoma, expected to be in service during the first quarter of 2017 A previously announced 200 MMcf/d plant in Grady County, Oklahoma, is still expected to be in service during the first quarter of 2016 35,880 horsepower of compression in the SCOOP was added in the second quarter of 2015, bringing total compression horsepower in the SCOOP area to approximately 174,000 Enable holds the leading position in processing capacity in the SCOOP, STACK and Cana Woodford region 2 Enable plans to expand SCOOP condensate stabilization capacity by 15,000 barrels per day (Bbl/d) 1. Source: Continental Resources, Inc. First Quarter 2015 Earnings Presentation 2. Source: Wood Mackenzie
Anadarko Gathering and Processing Highlights Producers also remain active in the STACK and Cana Woodford plays Enable is connecting wells in the STACK from a dedicated producer targeting the Meramec reservoir The Cana Woodford play currently has 4 rigs drilling wells to be connected to Enable s gathering systems $22 billion expected to be spent by producers in the these plays through 2025 1 and throughout the Greater Granite Wash Producers are active in a number of plays in the Greater Granite Wash, including the Tonkawa, Marmaton and Cleveland Sands plays Currently, 6 rigs are active drilling wells in this area to be connected to Enable s gathering systems New producers have entered this area through acreage acquisitions which has increased expectations for future drilling activity 7 1. Source: Wood Mackenzie
Ark-La-Tex and Arkoma G&P Highlights The Ark-La-Tex and Arkoma basins are primarily fee-based basins with significant minimum volume commitment and guaranteed return contracts In the Haynesville, new entrants are driving increased drilling activity with expectations for additional activity in the future Enable continues to develop crude and condensate assets to meet the rapidly growing need for condensate processing in east Texas and northwest Louisiana Recently expanded tank storage at the Waskom plant by acquiring a terminal Enable plans to commission new stabilizer capacity in the third quarter of 2015 In the Arkoma basin, producers are active in eastern Oklahoma This volume growth is increasing the utilization of existing capacity and additional gathering and processing infrastructure may be needed should activity continue 8
Bakken Crude Gathering Highlights Crude gathered volumes continue to grow as additional wells are connected to Enable s crude gathering systems The Bear Den system, a 19,500 Bbl/d system, is now fully operational with recent peak volumes of over 16,000 Bbl/d and additional volumes scheduled to come online in August. The Nesson system, with an anticipated capacity of 30,000 Bbl/d, has started initial operations and is anticipated to be fully in service by the fourth quarter of 2015 Enable s anchor customer, XTO, remains one of the play s most active producers 1 Williston Basin resource assessments continue to grow with improved well density and completion techniques 9 1. Source: North Dakota s Department of Mineral Resources website as of April 28, 2015
Transportation and Storage Highlights Supply Solutions Announcing an Enable Gas Transmission (EGT) system expansion involving new shipper commitments from the EGT open season in excess of 175,000 Dth/d The Bradley Lateral, an EGT lateral serving growing Oklahoma production, is still targeted to be completed in the fourth quarter of 2015 The EOIT intrastate system in Oklahoma continues to see increased interruptible transportation fees as a result of increased Oklahoma production Market Opportunities Enable was awarded several transportation contracts by industrial and utility customers during the quarter as lower natural gas prices continue to drive demand for natural gas transportation infrastructure Enable Gas Transmission, LLC (EGT) implemented an update to its Enhanced Firm Transportation (EFT) service offering to electric power generators effective July 1, 2015 Enable is currently responding to requests for proposals for end user projects developing around Enable s transportation systems Enable acquired the remaining 0.1% ownership of Southeast Supply Header (SESH) from CenterPoint Energy, Inc., on June 30, 2015, bringing total SESH ownership to 50% 10
Growth Strategy The oil and gas industry remains challenged but Enable has continued to effectively execute on its growth strategy Successful expansion and recontracting of transportation and storage capacity as demonstrated by today s EGT expansion announcement Continue to capture producer activity from new and existing dedications as demonstrated by success in the SCOOP, STACK, Cana Woodford and Greater Granite Wash plays Developing operations in crude, condensate and NGLs and Enable is well-positioned for the future Integrated and scalable assets in top-tier basins Significant fee-based margin from high-quality customers, with a hedging program that provides downside protection Focused on extending the value chain from wellhead to end users in our core commodities of gas, NGLs and crude and establishing a meaningful position in highgrowth basins 11
Second Quarter Operating Statistics Q2 2015 Q2 2014 Gathered volumes (TBtu/d) 3.19 3.41 Natural gas processed volumes (TBtu/d) 1.84 1.55 NGLs produced (MBbls/d) 1 74.19 69.47 Condensate sold (MBbls/d) 5.43 4.28 Crude Oil Gathered Volumes (MBbl/d) 9.00 1.59 Transportation volumes (TBtu/d) 4.97 4.97 Interstate firm contracted capacity (Bcf/d) 7.22 7.63 Intrastate transported volumes (TBtu/d) 1.83 1.63 1. Excludes condensate 12
Second Quarter Results $ in millions Q2 2015 Q2 2014 Gross Margin $313 $349 Gathering and Processing $181 $203 Transportation and Storage $133 $146 Operation and Maintenance Expense $131 $129 Net Income 1 $77 $120 Adjusted EBITDA $197 $211 Adjusted Interest Expense, net $28 $19 Maintenance Capital $33 $33 Distributable Cash Flow $135 $159 Expansion Capital 2 $264 $156 13 1. Net income attributable to Enable Midstream Partners, LP 2. Expansion capital for second quarter 2015 includes the $80 million acquisition of natural gas gathering assets in the Texas Panhandle from Monarch Natural Gas, LLC.
Outlook Assumptions Enable continues to see increased producer activity around its Anadarko basin footprint and increased demand for natural gas transportation services Enable s outlook is based on current estimates of producer volumes and transportation and storage customer demand Strong producer results in Enable s core areas of operations has accelerated capital needs and resulted in increased 2015 capital outlook Enable expects Contracted Expansion capital to grow through time as volume certainty grows and additional opportunities for downstream infrastructure develop Enable s outlook is based on the following prices assumptions: 2015 Outlook 2016 Outlook 2017 Outlook Natural Gas Henry Hub ($/MMBtu) $2.80 $3.00 $3.00 $3.50 $3.15 $3.65 NGLs Mont Belvieu, Texas ($/gal) $0.41 $0.45 $0.45 $0.50 $0.48 $0.53 NGLs Conway, Kansas ($/gal) $0.40 $0.44 $0.43 $0.48 $0.45 $0.50 Crude Oil WTI ($/Bbl) $52.00 $56.00 $55.00 $65.00 $60.00 $70.00 *Natural gas liquids composite based on assumed composition of 45%, 30%, 10%, 5%, and 10% for ethane, propane, normal butane, isobutane and natural gasoline, respectively 14
Financial And Operational Outlook $ in millions 2015 Outlook 2016 Outlook 2017 Outlook Natural Gas Gathered Volumes (Tbtu/d) 3.2 3.4 3.4 3.8 Natural Gas Processed Volumes (Tbtu/d) 1.7 1.9 2.1 2.4 Crude Oil Gathered Volumes (MBbl/d) 8.0 12.0 18.0 22.0 Adjusted EBITDA $800 $840 $850 $930 $900 $1,050 Adjusted Interest Expense, net $100 $110 $120 $130 Maintenance Capital $140 $160 $140 $160 Distributable Cash Flow $540 $590 $590 $650 Per-Unit Distribution Growth 1 3% 7% Coverage Ratio 1.00x or greater 15 1. For 2015, distribution growth is calculated as the growth rate from Enable s $0.30875 fourth quarter 2014 distribution to Enable's projected fourth quarter 2015 distribution
Expansion Capital Outlook $ in millions 2015 Outlook 2016 Outlook 2017 Outlook Contracted Expansion $700 $900 $700 $900 $200 $500 Acquisitions $80 N/A N/A Identified Opportunities $0 $100 $300 $500 $400 $600 Total $780 $1,080 $1,000 $1,400 $600 $1,100 Contracted Expansion includes: Gathering, compression and processing infrastructure to support projected volume growth from current contracts and acreage dedications, including infrastructure in the SCOOP, STACK, Northwest Cana, Bakken and Greater Granite Wash plays Identified Opportunities include transportation and G&P projects in late-stage negotiation, such as: Additional Bakken crude gathering expansions Anadarko gas gathering and processing expansions New end-user transportation service and market access pipeline opportunities NGL transportation infrastructure 16
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, including the impact of hedges: A 10% increase or decrease in natural gas and ethane prices from forecasted levels would result in an increase or decrease of approximately $4 million in Adjusted EBITDA for the third and fourth quarters of 2015 and $18 million in Adjusted EBITDA for 2016 A 10% increase or decrease in NGL (excluding ethane) and condensate prices from forecasted levels would result in an increase or decrease of approximately $2 million in Adjusted EBITDA for the third and fourth quarters of 2015 and $5 million in Adjusted EBITDA for 2016 Q3 2015 Q4 2015 Fee-Based Margin Profile 1 2016 Fee-Based Margin Profile 1 9% 17% ~91% feebased or hedged 10% 53% ~83% feebased or hedged 5% 51% 28% 27% 30% 11% 6% 53% Firm/MVC Fee-based Other Fee-based Commodity-based Hedged Commodity-based Unhedged 17 1. Percentages in pie charts based on Gross Margin contribution
A Compelling Investment Opportunity Consistent distribution growth since IPO Outlook for per-unit distribution growth through 2017 Currently no burden from incentive distribution rights (IDRs) Large-scale, integrated assets in quality, high returning basins Favorable margin profile with significant fee-based and demand-fee margin Investment grade ratings and substantial liquidity Proven ability to respond quickly to changing market dynamics through a focus on managing capital and operating expenses 18
19 Question and Answer Question & Answer
Appendix Appendix 20
Non-GAAP Reconciliations 3 Months Ended June 30 In millions 2015 2014 Revenues 590 827 Cost of goods sold, excluding depreciation and amortization 277 478 Gross Margin $313 $349 Net income attributable to Enable Midstream Partners, LP 77 120 Add: Depreciation and amortization expense 76 69 Interest expense, net of interest income 23 16 Income tax expense 1 - EBITDA $177 $205 Add: Loss on extinguishment of debt - 4 Distributions from equity method affiliates 15 4 Other non-cash losses 12 2 Less: Equity in earnings of equity method affiliates (7) (4) Adjusted EBITDA $197 $211 Less: Adjusted interest expense, net (28) (19) Maintenance capital expenditures (33) (33) Current income taxes (1) - Distributable cash Flow $135 $159 21
Hedges Commodity Q3 Q4 2015 2016 Natural Gas 1 Exposure Hedged (%) 68% 22% Average Hedge Price ($/MMBtu) $3.23 $2.85 Crude 2 Exposure Hedged (%) 94% 60% Average Hedge Price ($/Bbl) $60.86 $60.40 Propane Exposure Hedged (%) 89% 39% Average Hedge Price ($/gal) $0.66 $0.60 22 1. Excludes basis not matched with NYMEX and natural gas shrink associated with ethane spread positions 2. Enable hedges condensate exposure with crude Note: Table includes hedges and commodity exposures associated with equity volumes resulting from Enable s Gathering, Processing and Transportation businesses. Does not include a small 2015 hedge on an ethane to natural gas spread