Search Icon
EnLink Midstream (NYSE: ENLC) Delivers Solid Q1 2024 Results, Poised for Continued Growth
Published on September 24, 2024 | Ticker: ENLC

EnLink Midstream, LLC (NYSE: ENLC) reported its financial results for the first quarter of 2024, showcasing the resilience and diversification of its midstream operations. The company generated $338 million in adjusted EBITDA during the quarter, driven by the strength of its Louisiana system, which offset temporary volume impacts from winter weather on its gathering and processing (G&P) assets.

Financials

For the full year 2023, EnLink reported annual net income of $206.2 million, annual revenue of $6.879 billion, annual operating cash flow of $1.223 billion, and annual free cash flow of $777 million. These robust financial results demonstrate the company's ability to navigate market challenges and deliver consistent performance.

Segment Performance

In the first quarter of 2024, EnLink's Permian segment reported a segment profit of $89 million, which included $9.3 million in gross operating expenses related to plant relocations and $2.4 million in unrealized derivative losses. Excluding these items, the Permian segment's profit decreased 10% sequentially but grew 12% year-over-year, as the company's diverse producer mix remained active despite the impact of winter weather.

The Louisiana segment delivered a strong performance, reporting a segment profit of $110.4 million, including $19.5 million in unrealized derivative losses. Excluding the impact of unrealized derivatives, the Louisiana segment's profit grew approximately 26% sequentially and 23% year-over-year, benefiting from price volatility and normal seasonal effects in the NGL business.

In the Oklahoma segment, EnLink reported a segment profit of $85.7 million, which included $4.1 million in unrealized derivative losses. Excluding the impact of unrealized derivatives, the Oklahoma segment's profit decreased 19% sequentially and 7% year-over-year, primarily due to lower volumes and the impact of a one-time contract reset. The North Texas segment generated a segment profit of $59.8 million, including $0.1 million in unrealized derivative losses. Excluding unrealized derivatives, the North Texas segment's profit decreased 12% sequentially and 18% year-over-year, also impacted by lower volumes and the contract reset.

Business Overview

EnLink's diverse asset base and geographic footprint have proven to be a key strength, as the company's Louisiana Gas segment was able to offset the temporary volume impacts experienced in its G&P businesses due to the winter weather. The company's management team remains focused on executing its strategic initiatives, including the development of its carbon capture, transportation, and sequestration (CCS) business.

In the CCS space, EnLink continues to make progress, though the industry's development has been slower than initially anticipated. The company is gaining valuable experience through the operation of its Bridgeport CCS facility and is well-positioned along the Mississippi River corridor, with existing infrastructure and relationships that can be leveraged as the CCS market matures.

Louisiana Strategy

EnLink's Louisiana strategy is unfolding in three phases. The first phase involves renewing capacity at higher rates, which the company has successfully executed on, securing an incremental annual margin opportunity. The second phase is focused on leveraging existing assets to drive attractive, quick-to-market projects, such as the recently announced Henry Hub to River project, which will increase gas supply to the Mississippi River corridor by 210 million cubic feet per day.

The third phase of EnLink's Louisiana strategy involves adding new projects to increase supply to its gas pipelines and expand its gas storage position. The company is currently marketing an expansion of its Jefferson Island storage hub and is pleased with the response from both existing and new customers, as the need for storage capacity grows to support the increasing demand for natural gas in the region.

Outlook

Beyond Louisiana, EnLink is also well-positioned to capitalize on the growing demand for natural gas to power the nation's evolving energy landscape, including the rapid emergence of data centers and the AI revolution. The company estimates that data center electricity consumption could triple or more by 2030, which would be the equivalent of adding 40 million homes. This surge in demand is expected to drive significant incremental natural gas consumption, creating a potential growth opportunity for EnLink.

Liquidity

EnLink's balance sheet remains strong, with a leverage ratio of 3.3x at the end of the first quarter. The company recently received an investment-grade credit rating upgrade from S&P, further solidifying its financial position. EnLink continues to prioritize returning capital to shareholders, having repurchased approximately 46 million common units, or nearly 10% of its outstanding units, since the end of 2021.

Conclusion

Looking ahead, EnLink is tracking towards the midpoint of its full-year 2024 adjusted EBITDA guidance of $1.31 billion to $1.41 billion. The company remains focused on executing its strategic initiatives, including the development of its CCS business, the expansion of its Louisiana assets, and the capture of growing natural gas demand across its diverse geographic footprint.

Overall, EnLink Midstream's first quarter results demonstrate the resilience and diversification of its midstream operations, positioning the company for continued growth and value creation for its shareholders.

You may be interested in...
Enbridge Inc. (ENB): An Energy Infrastructure Giant Powering Steady Growth
Enbridge Inc. (ENB) is a leading energy infrastructure company that has solidified its position as a dominant player in the North American energy landscape. With a history spanning over seven decades, Enbridge has evolved from a small pipeline operator to a diversified energy conglomerate, boasting an extensive network of liquids and natural gas pipelines, regulated natural gas distribution utilities, and a growing renewable power generation business.
Read More
EnLink Midstream, LLC (NYSE:ENLC) - Executing on Strategic Priorities Amidst Industry Headwinds
EnLink Midstream, LLC (NYSE:ENLC) is a leading midstream energy infrastructure company that provides essential services across premier production basins and core demand centers in the United States. With a diverse asset portfolio and a proven track record of operational excellence, EnLink has positioned itself as a strategic partner for producers, processors, and consumers navigating the evolving energy landscape.
Read More
Western Midstream Partners, LP (WES): A Midstream Powerhouse Redefining the Industry
Western Midstream Partners, LP (WES) is a leading midstream energy company that has undergone a remarkable transformation over the past decade, cementing its position as a true powerhouse in the industry. With a diversified asset portfolio spanning Texas, New Mexico, and the Rocky Mountains, WES has consistently demonstrated its ability to deliver robust financial performance and shareholder value.
Read More
Kinetik Holdings Inc. (KNTK) - A Midstream Energy Leader Driving Growth and Returns
Kinetik Holdings Inc. (KNTK) is an integrated midstream energy company that provides comprehensive gathering, transportation, compression, processing, and treating services for natural gas, NGLs, and crude oil in the Permian Basin. The company has a strategic footprint across the core of the prolific Delaware Basin, with assets and operations that have expanded significantly over the past decade.
Read More
Enservco Corporation (ENSV): Navigating Challenges and Seizing Opportunities in the Oilfield Services Landscape
Enservco Corporation (ENSV) is a well-established player in the domestic onshore oil and natural gas industry, providing a diverse range of services to its clients. The company’s journey has been marked by both challenges and successes, as it has navigated the cyclical nature of the energy market and adapted to changing industry dynamics.
Read More