Enable Midstream Partners, LP (ENBL)

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Enable Midstream Partners LP (NYSE:ENBL)

Q2 2014 Results Earnings Conference Call

August 06, 2014, 9:00 am ET

Executives

Matt Beasley - Director, Finance

Lynn Bourdon - President, Chief Executive Officer, Director of Enable GP, LLC

Keith Mitchell - Chief Operating Officer of Enable GP, LLC

Rod Sailor - Chief Financial Officer of Enable GP, LLC

Analysts

Gabe Moreen - Bank of America

Matt Tucker - KeyBanc

Ted Durbin - Goldman Sachs

Neel Mitra - Tudor, Pickering

John Edwards - Credit Suisse

Shneur Gershuni - UBS

Brian Lasky - Morgan Stanley

Presentation

Operator

Welcome to Enable Midstream Partners second quarter 2014 earnings conference call and webcast. At this time, all participants have been placed in a listen-only mode. (Operator Instructions).

It is now my pleasure to turn the floor over to Matt Beasley. You may begin.

Matt Beasley

Thank you. Good morning and welcome to Enable Midstream Partners second quarter 2014 earnings call. I am joined on today's call by our President and CEO Lynn Bourdon, our Chief Operating Officer Keith Mitchell, our Chief Financial Officer Rod Sailor, as well as other members of management.

Statements made during this call that include Enable Midstream's expectations or predictions should be considered forward-looking statements and are covered by the Safe Harbor provision of the Securities Acts of 1933 and 1934. Actual results could differ materially from our projections and a discussion of factors that could cause actual results to differ from our projections can be found in our SEC filings.

Also, please see the appendix the presentation for a reconciliation of non-GAAP financial measures. On today's call, we will be comparing second quarter 2014 results to pro forma second quarter 2013 results since second quarter 2013 historical results do not include the results of Enogex LLC for the month of April 2013.

With that, we will get started and I will turn the call over to Lynn Bourdon.

Lynn Bourdon

Thanks, matt. Good morning and thank you for participating in Enable Midstream Partners' second quarter earnings call.

Enable had a solid second quarter, where we saw growth in our key financial metrics. During the quarter, we renewed contracts on our natural gas pipeline system, added acreage dedications in a high-growth Anadarko basin, grew our NGL production, made significant infrastructure investment decisions and solidified our growth strategy. We are excited to share the details of all of these accomplishments and more on today's call.

To start the call, I plan to cover a few financial highlights and then I will turn the call over to Keith who will cover segment highlights including a SCOOP update and an overview of our operating statistics. Rod will then cover second quarter results in detail and provide our outlook for the remainder of 2014 and 2015. And then finally, our review our growth strategy and key investment highlights. We will also be taking your questions at the end of the call today.

This morning, we reported second-quarter adjusted EBITDA of $211 million, an increase of 7% over pro forma second quarter 2013. Distributable cash flow totaled $159 million for the second quarter, an increase of 17% compared to pro forma second quarter 2013. The primary drivers of our increased results were increased gathering and processing gross margin resulting from higher natural gas gathering and processing volumes on our Anadarko system, as well as increased transportation and storage gross margin resulting from higher off system transportation volumes and associated fees and higher rates on transportation services for on system demand and higher other firm transportation revenues.

On July 25, we announced our first public distribution, a distribution for the second quarter of $0.2464 per unit or $0.295 per unit on a full quarter basis, which is a 2.6% increase over Enable's minimum quarterly distribution. This distribution will be paid on August 14 to unitholders of record as of yesterday's close of business.

Enable continued to demonstrate its ability to access the capital markets during the quarter. In May, we issued $1.65 billion of senior notes establishing benchmark securities in the five, 10 and 30 year space with a weighted-average coupon of 3.9%. At the time of issuance, these notes had the lowest five and 10 year coupon of 2014 and the second lowest 30 year coupon when compared to MLP issuances for the year. This $1.65 billion debt issuance was in addition to our $575 million IPO in April and a senior notes offering at SESH in June. Then on May 30, we acquired an additional 24.95% interest in SESH from CenterPoint Energy, bringing our current SESH ownership to 49.9%. We anticipate that the SESH acquisition will be accretive to both our DCF and per-unit distributions.

Now, I will turn the call over to Keith.

Keith Mitchell

Thanks, Lynn. First I will cover the highlights from our gathering and processing segment for the quarter. We saw rich gas volumes grow during in the quarter with NGL production increasing 19% compared to pro forma second quarter 2014. One of our rich gas areas contributing to the increased production is the SCOOP in South Central Oklahoma, where we added almost 18,000 horsepower of compression during the quarter to support the volume growth.

We also continued to optimize and to integrate our gathering and processing systems. During the quarter, we expanded the connection of our Clinton Plant to our super-header processing system, which allows us to better utilize our processing plants as natural gas production continues to grow across the Anadarko system. In addition, we integrated two gathering system in the Anadarko basin during the quarter, which allowed us to process gas that was previously unprocessed. In June, we announced upgrades to our Cox City Plant which will improve the efficiency of the plant and allow us to better process the increasing rich gas production in the Anadarko basin.

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