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Enlink Midstream, Llc (ENLC) SEC Filing 10-Q Quarterly report for the period ending Monday, September 30, 2019

SEC Filings

Enlink Midstream, Llc

CIK: 1592000 Ticker: ENLC

 

Exhibit 99.1

 

 

 

FOR IMMEDIATE RELEASE

November 7, 2019

 

Investor Relations: Kate Walsh, Vice President of Investor Relations & Tax, 214-721-9696, kate.walsh@enlink.com

Media Relations: Jill McMillan, Vice President of Strategic Relations & Public Affairs, 214-721-9271, jill.mcmillan@enlink.com

 

EnLink Midstream Reports Third Quarter 2019 Results, Provides Updates

 

DALLAS, November 7 — EnLink Midstream, LLC (NYSE: ENLC) (EnLink) reported financial results for the third quarter of 2019, updated certain 2019 full-year guidance metrics, and detailed its 2020 growth capital expenditures outlook. EnLink also provided an update from Barry Davis, Chairman and Chief Executive Officer, regarding strategic actions being taken by EnLink, which represent up to $75 million of adjusted EBITDA to the company in 2020.

 

Highlights:

Provided an update from Davis on observations since his return to the CEO role in early August 2019 and provided an execution plan to respond to changing market conditions. The plan in aggregate is expected to result in up to $75 million of cost reductions, margin enhancements, and commercial wins during 2020. A number of initiatives are already underway, which will generate significant positive results in the near term.
Announced expectation for full-year 2019 growth capital expenditures, net to EnLink, to be at the low end of the previously announced guidance range of $630 million to $710 million.
Outlined forecast for full-year 2020 growth capital expenditures, net to EnLink, of $275 million to $375 million. This forecast represents an approximate 50% decrease as compared to the projected full-year 2019 growth capital expenditures of around $630 million.
Announced further commercial success in Louisiana with the signing of a new long-term natural gas purchase agreement at attractive rates. Under the terms of the agreement, EnLink will utilize its existing assets to transport natural gas from northern Louisiana to Gulf Coast demand markets with no incremental capital expenditures.
Placed into service the 65 million cubic feet per day (MMcf/d) Riptide natural gas processing plant expansion in the Permian Basin in late September 2019, bringing total processing capacity in the Permian Basin to over 800 MMcf/d.
Previously declared a quarterly cash distribution of $0.283 per unit on all outstanding common units for the third quarter of 2019, which was the same as the declared distribution for the second quarter of 2019.

 

“EnLink's third quarter performance demonstrates the strength of our large-scale diversified platform, and the flexibility of our operations in the midst of a changing operating environment,” Davis said. “We expect growth in the fourth quarter, as compared to the third quarter, and are forecasting 2019 adjusted EBITDA to be at the low end of our guidance range. EnLink remains in a solid competitive position, and we are taking decisive actions to enhance the profitability of our existing business, position ourselves to capture long-term opportunities, strengthen our financial position, and drive organizational efficiency throughout the company.”

 

Adjusted EBITDA and distributable cash flow used in this press release are non-GAAP measures and are explained in greater detail under "Non-GAAP Financial Information and Other Definitions" below.

 

Third Quarter 2019 Financial Results and 2019 Full-Year Guidance Update

Reported net income attributable to EnLink of $11.8 million for the third quarter of 2019. EnLink is projecting a net loss for full-year 2019, which is expected to be below the previously announced guidance range.

 


The following information was filed by Enlink Midstream, Llc (ENLC) on Thursday, November 7, 2019 as an 8K 2.02 statement, which is an earnings press release pertaining to results of operations and financial condition. It may be helpful to assess the quality of management by comparing the information in the press release to the information in the accompanying 10-Q Quarterly Report statement of earnings and operation as management may choose to highlight particular information in the press release.
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

Form 10-Q

Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the quarterly period ended September 30, 2019

OR

Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the transition period from               to

Commission file number: 001-36336

ENLINK MIDSTREAM, LLC
(Exact name of registrant as specified in its charter)
Delaware46-4108528
(State of organization)(I.R.S. Employer Identification No.)
1722 Routh St., Suite 1300
Dallas,Texas75201
(Address of principal executive offices)(Zip Code)

(214) 953-9500
(Registrant’s telephone number, including area code)

SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE SECURITIES EXCHANGE ACT OF 1934:
Title of Each ClassTrading SymbolName of Exchange on which Registered
Common Units Representing Limited
ENLC
The New York Stock Exchange
Liability Company Interests


Indicate by check mark whether registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes No

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Securities Exchange Act. (Check one):
Large accelerated filerAccelerated filer
Non-accelerated filerSmaller reporting company
Emerging growth company

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes No

As of November 4, 2019, the Registrant had 487,612,888 common units outstanding.


TABLE OF CONTENTS


2

DEFINITIONS
 
The following terms as defined are used in this document:
Defined TermDefinition
/dPer day.
2014 PlanEnLink Midstream, LLC’s 2014 Long-Term Incentive Plan.
AMZAlerian MLP Index for Master Limited Partnerships.
ASCThe FASB Accounting Standards Codification.
ASC 842
ASC 842, Leases, a new accounting standard effective January 1, 2019 related to the accounting for lease agreements.
Ascension JVAscension Pipeline Company, LLC, a joint venture between a subsidiary of ENLK and a subsidiary of Marathon Petroleum Corporation in which ENLK owns a 50% interest and Marathon Petroleum Corporation owns a 50% interest. The Ascension JV, which began operations in April 2017, owns an NGL pipeline that connects ENLK’s Riverside fractionator to Marathon Petroleum Corporation’s Garyville refinery.
ASUThe FASB Accounting Standards Update.
AvengerAvenger crude oil gathering system, a crude oil gathering system in the northern Delaware Basin.
Bbls Barrels.
BcfBillion cubic feet.
Cedar Cove JVCedar Cove Midstream LLC, a joint venture between a subsidiary of ENLK and a subsidiary of Kinder Morgan, Inc. in which ENLK owns a 30% interest and Kinder Morgan, Inc. owns a 70% interest. The Cedar Cove JV, which was formed in November 2016, owns gathering and compression assets in Blaine County, Oklahoma, located in the STACK play.
CFTCU.S. Commodity Futures Trading Commission.
CNOWCentral Northern Oklahoma Woodford Shale.
CommissionU.S. Securities and Exchange Commission.
Consolidated Credit FacilityA $1.75 billion unsecured revolving credit facility entered into by ENLC that matures on January 25, 2024, which includes a $500.0 million letter of credit subfacility. The Consolidated Credit Facility was available upon closing of the Merger and is guaranteed by ENLK.
Delaware Basin JVDelaware G&P LLC, a joint venture between a subsidiary of ENLK and an affiliate of NGP in which ENLK owns a 50.1% interest and NGP owns a 49.9% interest. The Delaware Basin JV, which was formed in August 2016, owns the Lobo processing facilities located in the Delaware Basin in Texas.
DevonDevon Energy Corporation.
DTADeferred tax asset.
DTLDeferred tax liability.
EnfieldEnfield Holdings, L.P.
ENLCEnLink Midstream, LLC or, when applicable, EnLink Midstream, LLC together with its consolidated subsidiaries.
ENLC Class C common UnitsA class of non-economic ENLC common units issued to Enfield immediately prior to the Merger equal to the number of Series B Preferred Units of ENLK held by Enfield immediately prior to the effective time of the Merger, in order to provide Enfield with certain voting rights with respect to ENLC.
ENLC Credit FacilityA $250.0 million secured revolving credit facility entered into by ENLC that would have matured on March 7, 2019, which included a $125.0 million letter of credit subfacility. The ENLC Credit Facility was terminated on January 25, 2019 in connection with the consummation of the Merger.
ENLC EDAEquity Distribution Agreement entered into by ENLC in February 2019 with RBC Capital Markets, LLC, Merrill Lynch, Pierce, Fenner & Smith Incorporated, Barclays Capital Inc., BMO Capital Markets Corp., Citigroup Global Markets Inc., Credit Suisse Securities (USA) LLC, J.P. Morgan Securities LLC, Jefferies LLC, Mizuho Securities USA LLC, MUFG Securities Americas Inc., SunTrust Robinson Humphrey, Inc., and Wells Fargo Securities, LLC (collectively, the “Sales Agents”) to sell up to $400.0 million in aggregate gross sales of ENLC common units from time to time through an “at the market” equity offering program.
ENLKEnLink Midstream Partners, LP or, when applicable, EnLink Midstream Partners, LP together with its consolidated subsidiaries. Also referred to as the “Partnership.”
ENLK Credit FacilityA $1.5 billion unsecured revolving credit facility entered into by ENLK that would have matured on March 6, 2020, which included a $500.0 million letter of credit subfacility. The ENLK Credit Facility was terminated on January 25, 2019 in connection with the consummation of the Merger.
EOGPEnLink Oklahoma Gas Processing, LP or EnLink Oklahoma Gas Processing, LP together with, when applicable, its consolidated subsidiaries. As of January 31, 2019, EOGP is wholly-owned by the Operating Partnership.
FASBFinancial Accounting Standards Board.
3

GAAPGenerally accepted accounting principles in the United States of America.
GalGallons.
GCFGulf Coast Fractionators, which owns an NGL fractionator in Mont Belvieu, Texas. ENLK owns 38.75% of GCF.
General PartnerEnLink Midstream GP, LLC, the general partner of ENLK, which owns a 0.4% general partner interest in ENLK. Prior to the effective time of the Merger, the General Partner also owned all of the incentive distribution rights in ENLK.
GIPGlobal Infrastructure Management, LLC, an independent infrastructure fund manager, itself, its affiliates, or managed fund vehicles, including GIP III Stetson I, L.P., GIP III Stetson II, L.P., and their affiliates.
GIP TransactionOn July 18, 2018, subsidiaries of Devon closed a transaction to sell all of their equity interests in ENLK, ENLC, and the managing member of ENLC to GIP.
GP PlanEnLink Midstream GP, LLC’s Long-Term Incentive Plan.
Gross Operating MarginA non-GAAP financial measure. See “Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations—Non-GAAP Financial Measures” for the definition and other information.
ISDAsInternational Swaps and Derivatives Association Agreements.
MergerOn January 25, 2019, NOLA Merger Sub merged with and into ENLK with ENLK continuing as the surviving entity and a subsidiary of ENLC.
Merger AgreementThe Agreement and Plan of Merger, dated as of October 21, 2018, by and among ENLK, the General Partner, ENLC, the managing member of ENLC, and NOLA Merger Sub related to the Merger.
MMbblsMillion barrels.
MMbtuMillion British thermal units.
MMcfMillion cubic feet.
MVCMinimum volume commitment.
NGLNatural gas liquid.
NGPNGP Natural Resources XI, LP.
NOLA Merger Sub NOLA Merger Sub, LLC, previously a wholly-owned subsidiary of ENLC prior to the Merger.
Operating PartnershipEnLink Midstream Operating, LP, a Delaware limited partnership and wholly owned subsidiary of ENLK.
ORVENLK’s Ohio River Valley crude oil, condensate stabilization, natural gas compression, and brine disposal assets in the Utica and Marcellus shales.
OTCOver-the-counter.
Permian BasinA large sedimentary basin that includes the Midland and Delaware Basins in west Texas and New Mexico.
POL contractsPercentage-of-liquids contracts.
POP contractsPercentage-of-proceeds contracts.
Series B Preferred UnitsENLK’s Series B Cumulative Convertible Preferred Units.
Series C Preferred UnitsENLK’s Series C Fixed-to-Floating Rate Cumulative Redeemable Perpetual Preferred Units.
STACKSooner Trend Anadarko Basin Canadian and Kingfisher Counties in Oklahoma.
Term LoanAn $850.0 million term loan entered into by ENLK on December 11, 2018 with Bank of America, N.A., as Administrative Agent, Bank of Montreal and Royal Bank of Canada, as Co-Syndication Agents, Citibank, N.A. and Wells Fargo Bank, National Association, as Co-Documentation Agents, and the lenders party thereto, which ENLC assumed in connection with the Merger and the obligations of which ENLK guarantees.
Thunderbird PlantA gas processing plant in central Oklahoma.
Tiger PlantA gas processing plant in the Delaware Basin.
White StarWhite Star Petroleum Holdings, LLC.

4

PART I—FINANCIAL INFORMATION
Item 1. Financial Statements
ENLINK MIDSTREAM, LLC AND SUBSIDIARIES
Consolidated Balance Sheets
(In millions, except unit data)
September 30, 2019December 31, 2018
(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents$102.2  $100.4  
Accounts receivable:
Trade, net of allowance for bad debt of $0.5 and $0.3, respectively
44.1  126.3  
Accrued revenue and other450.4  705.9  
Related party—  0.7  
Fair value of derivative assets9.6  28.6  
Natural gas and NGLs inventory, prepaid expenses, and other68.5  74.2  
Total current assets674.8  1,036.1  
Property and equipment, net of accumulated depreciation of $3,304.4 and $2,967.4, respectively
7,084.2  6,846.7  
Intangible assets, net of accumulated amortization of $515.0 and $422.2, respectively
1,280.8  1,373.6  
Goodwill1,123.7  1,310.2  
Investment in unconsolidated affiliates78.6  80.1  
Fair value of derivative assets7.9  4.1  
Other assets, net134.3  43.3  
Total assets$10,384.3  $10,694.1  
LIABILITIES AND MEMBERS’ EQUITY
Current liabilities:
Accounts payable and drafts payable$91.9  $105.5  
Accounts payable to related party3.6  4.3  
Accrued gas, NGLs, condensate, and crude oil purchases323.8  500.4  
Fair value of derivative liabilities9.5  21.8  
Current maturities of long-term debt—  399.8  
Other current liabilities282.0  248.2  
Total current liabilities710.8  1,280.0  
Long-term debt4,688.3  4,031.0  
Asset retirement obligations15.3  14.8  
Other long-term liabilities90.8  20.0  
Deferred tax liability, net—  362.4  
Fair value of derivative liabilities10.2  2.4  

Redeemable non-controlling interest5.5  9.3  
Members’ equity:
Members’ equity (487,595,528 and 181,309,981 units issued and outstanding, respectively)
3,205.7  1,730.9  
Accumulated other comprehensive loss(13.2) (2.0) 
Non-controlling interest1,670.9  3,245.3  
Total members’ equity4,863.4  4,974.2  
Total liabilities and members’ equity$10,384.3  $10,694.1  




See accompanying notes to consolidated financial statements.
5

ENLINK MIDSTREAM, LLC AND SUBSIDIARIES
Consolidated Statements of Operations
(In millions, except per unit data)
Three Months Ended
September 30,
Nine Months Ended
September 30,
2019201820192018
(Unaudited)
Revenues:
Product sales$1,137.2  $1,832.2  $4,118.5  $4,766.5  
Product sales—related parties—  10.2  —  41.0  
Midstream services263.3  241.5  762.5  476.1  
Midstream services—related parties—  35.8  —  377.2  
Gain (loss) on derivative activity7.5  (5.4) 16.2  (20.1) 
Total revenues1,408.0  2,114.3  4,897.2  5,640.7  
Operating costs and expenses:
Cost of sales999.5  1,696.6  3,663.0  4,403.7  
Operating expenses119.2  114.7  351.6  337.3  
General and administrative38.5  41.9  122.1  99.8  
(Gain) loss on disposition of assets(3.0) —  (2.9) 1.3  
Depreciation and amortization157.3  146.7  463.1  430.1  
Impairments—  24.6  186.5  24.6  
Loss on secured term loan receivable—  —  52.9  —  
Total operating costs and expenses1,311.5  2,024.5  4,836.3  5,296.8  
Operating income96.5  89.8  60.9  343.9  
Other income (expense):
Interest expense, net of interest income(56.6) (45.2) (160.5) (134.3) 
Income from unconsolidated affiliates4.0  4.3  14.0  11.7  
Other income (expense)(0.1) 0.1  0.1  0.3  
Total other expense(52.7) (40.8) (146.4) (122.3) 
Income (loss) before non-controlling interest and income taxes43.8  49.0  (85.5) 221.6  
Income tax expense(6.3) (4.0) (2.7) (17.3) 
Net income (loss)37.5  45.0  (88.2) 204.3  
Net income attributable to non-controlling interest25.7  37.3  92.4  156.2  
Net income (loss) attributable to ENLC$11.8  $7.7  $(180.6) $48.1  
Net income (loss) attributable to ENLC per unit:
Basic common unit$0.02  $0.04  $(0.40) $0.27  
Diluted common unit$0.02  $0.04  $(0.40) $0.26  















See accompanying notes to consolidated financial statements.
6

ENLINK MIDSTREAM, LLC AND SUBSIDIARIES
Consolidated Statements of Comprehensive Income (Loss)
(In millions)
Three Months Ended
September 30,
Nine Months Ended
September 30,
2019201820192018
(Unaudited)
Net income (loss)$37.5  $45.0  $(88.2) $204.3  
Loss on designated cash flow hedge (1)(1.3) —  (11.2) —  
Comprehensive income (loss)36.2  45.0  (99.4) 204.3  
Comprehensive income attributable to non-controlling interest25.7  37.3  92.4  156.2  
Comprehensive income (loss) attributable to ENLC$10.5  $7.7  $(191.8) $48.1  
____________________________
(1)Includes a tax benefit of $0.5 million and $4.1 million for the three and nine months ended September 30, 2019, respectively.










































See accompanying notes to consolidated financial statements.
7

ENLINK MIDSTREAM, LLC AND SUBSIDIARIES
Consolidated Statements of Changes in Members’ Equity
(In millions)
Common UnitsAccumulated Other Comprehensive LossNon-Controlling InterestTotalRedeemable Non-controlling interest (Temporary Equity)
$Units$$$$
(Unaudited)
Balance, December 31, 2018$1,730.9  181.3  $(2.0) $3,245.3  $4,974.2  $9.3  
Adoption of ASC 842 0.3  —  —  —  0.3  —  
Balance, January 1, 20191,731.2  181.3  (2.0) 3,245.3  4,974.5  9.3  
Conversion of restricted units for common units, net of units withheld for taxes(5.6) 1.0  —  (2.8) (8.4) —  
Unit-based compensation12.2  —  —  1.4  13.6  —  
Contributions from non-controlling interests—  —  —  15.7  15.7  —  
Distributions(51.0) —  —  (127.6) (178.6) —  
Fair value adjustment related to redeemable non-controlling interest2.5  —  —  —  2.5  (2.1) 
Net income (loss)(176.3) —  —  41.5  (134.8) —  
Issuance of common units for ENLK public common units related to the Merger1,958.1  304.9  —  (1,559.1) 399.0  —  
Balance, March 31, 20193,471.1  487.2  (2.0) 1,614.4  5,083.5  7.2  
Unit-based compensation6.6  —  —  —  6.6  —  
Contributions from non-controlling interests—  —  —  29.5  29.5  —  
Distributions(137.2) —  —  (35.1) (172.3) —  
Loss on designated cash flow hedge (1)—  —  (9.9) —  (9.9) —  
Fair value adjustment related to redeemable non-controlling interest0.2  —  —  —  0.2  (1.4) 
Net income (loss)(16.1) —  —  25.2  9.1  —  
Balance, June 30, 20193,324.6  487.2  (11.9) 1,634.0  4,946.7  5.8  
Conversion of restricted units for common units, net of units withheld for taxes(2.1) 0.4  —  —  (2.1) —  
Unit-based compensation11.1  —  —  —  11.1  —  
Contributions from non-controlling interests—  —  —  33.4  33.4  —  
Distributions(139.8) —  —  (22.1) (161.9) (0.3) 
Loss on designated cash flow hedge (2)—  —  (1.3) —  (1.3) —  
Fair value adjustment related to redeemable non-controlling interest0.1  —  —  —  0.1  (0.1) 
Net income11.8  —  —  25.6  37.4  0.1  
Balance, September 30, 2019$3,205.7  487.6  $(13.2) $1,670.9  $4,863.4  $5.5  
____________________________
(1)Includes a tax benefit of $3.6 million.
(2)Includes a tax benefit of $0.5 million.







See accompanying notes to consolidated financial statements.
8

ENLINK MIDSTREAM, LLC AND SUBSIDIARIES
Consolidated Statements of Changes in Members’ Equity (Continued)
(In millions)
Common UnitsAccumulated Other Comprehensive LossNon-Controlling InterestTotalRedeemable Non-controlling interest (Temporary Equity)
$Units$$$$
(Unaudited)
Balance, December 31, 2017$1,924.2  180.6  $(2.0) $3,634.5  $5,556.7  $4.6  
Issuance of common units by ENLK—  —  —  0.9  0.9  —  
Conversion of restricted units for common units, net of units withheld for taxes(2.9) 0.4  —  —  (2.9) —  
Non-controlling interest’s impact of conversion of restricted units—  —  —  (2.7) (2.7) —  
Unit-based compensation4.4  —  —  4.4  8.8  —  
Change in equity due to issuance of units by ENLK(1.3) —  —  1.7  0.4  —  
Contributions from non-controlling interests—  —  —  22.7  22.7  —  
Distributions(47.5) —  —  (121.2) (168.7) —  
Net income12.4  —  —  44.7  57.1  —  
Balance, March 31, 20181,889.3  181.0  (2.0) 3,585.0  5,472.3  4.6  
Conversion of restricted units for common units, net of units withheld for taxes(0.6) 0.1  —  —  (0.6) —  
Non-controlling interest’s impact of conversion of restricted units—  —  —  (0.7) (0.7) —  
Unit-based compensation4.0  —  —  4.0  8.0  —  
Change in equity due to issuance of units by ENLK(0.6) —  —  0.8  0.2  —  
Contributions from non-controlling interests—  —  —  31.6  31.6  —  
Distributions(48.2) —  —  (134.3) (182.5) —  
Net income28.0  —  —  74.2  102.2  —  
Balance, June 30, 20181,871.9  181.1  (2.0) 3,560.6  5,430.5  4.6  
Issuance of common units by ENLK—  —  —  45.2  45.2  —  
Conversion of restricted units for common units, net of units withheld for taxes(2.2) 0.2  —  —  (2.2) —  
Non-controlling interest’s impact of conversion of restricted units—  —  —  (2.2) (2.2) —  
Unit-based compensation7.5  —  —  8.0  15.5  —  
Change in equity due to issuance of units by ENLK3.1  —  —  (3.9) (0.8) —  
Contributions from non-controlling interests—  —  —  19.1  19.1  —  
Distributions(49.3) —  —  (123.8) (173.1) —  
Fair value adjustment related to redeemable non-controlling interest(0.3) —  —  (1.1) (1.4) 1.4  
Net income7.7  —  —  37.1  44.8  0.2  
Balance, September 30, 2018$1,838.4  181.3  $(2.0) $3,539.0  $5,375.4  $6.2  







See accompanying notes to consolidated financial statements.
9

ENLINK MIDSTREAM, LLC AND SUBSIDIARIES
Consolidated Statements of Cash Flows
(In millions)
Nine Months Ended September 30,
20192018
(Unaudited)
Cash flows from operating activities:
Net income (loss)$(88.2) $204.3  
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Impairments186.5  24.6  
Depreciation and amortization463.1  430.1  
Loss on secured term loan receivable52.9  —  
Non-cash unit-based compensation31.2  31.8  
(Gain) loss on derivatives recognized in net income (loss)(16.2) 20.1  
Cash settlements on derivatives12.5  (4.3) 
Amortization of debt issue costs, net discount (premium) of notes3.9  3.4  
Distribution of earnings from unconsolidated affiliates14.7  14.0  
Income from unconsolidated affiliates(14.0) (11.7) 
Non-cash revenue from contract restructuring—  (45.5) 
Other operating activities(4.3) 15.0  
Changes in assets and liabilities:
Accounts receivable, accrued revenue, and other338.6  (292.2) 
Natural gas and NGLs inventory, prepaid expenses, and other2.7  (93.0) 
Accounts payable, accrued product purchases, and other accrued liabilities(205.9) 242.4  
Net cash provided by operating activities777.5  539.0  
Cash flows from investing activities:
Additions to property and equipment(594.5) (639.4) 
Proceeds from sale of property13.7  1.5  
Other investing activities(2.2) 4.9  
Net cash used in investing activities(583.0) (633.0) 
Cash flows from financing activities:
Proceeds from borrowings2,855.0  2,011.8  
Payments on borrowings(2,591.4) (1,220.0) 
Payment of installment payable for EOGP acquisition—  (250.0) 
Debt financing costs(10.0) —  
Conversion of restricted units, net of units withheld for taxes(10.5) (5.7) 
Proceeds from issuance of ENLK common units—  46.1  
Distribution to members(328.0) (145.0) 
Distributions to non-controlling interests(185.1) (379.3) 
Contributions by non-controlling interests78.6  73.4  
Other financing activities(1.3) (3.7) 
Net cash provided by (used in) financing activities(192.7) 127.6  
Net increase in cash and cash equivalents1.8  33.6  
Cash and cash equivalents, beginning of period100.4  31.2  
Cash and cash equivalents, end of period$102.2  $64.8  
Supplemental disclosures of cash flow information:
Cash paid for interest$128.0  $108.8  
Cash paid for income taxes$2.8  $0.6  
Non-cash investing activities:
Non-cash accrual of property and equipment$24.6  $13.3  
Discounted secured term loan receivable from contract restructuring$—  $47.7  
 






See accompanying notes to consolidated financial statements.
10

ENLINK MIDSTREAM, LLC AND SUBSIDIARIES
Notes to Consolidated Financial Statements
September 30, 2019
(Unaudited)
(1) General

In this report, the terms “Company” or “Registrant,” as well as the terms “ENLC,” “our,” “we,” “us,” or like terms, are sometimes used as abbreviated references to EnLink Midstream, LLC itself or EnLink Midstream, LLC together with its consolidated subsidiaries, including ENLK and its consolidated subsidiaries. References in this report to “EnLink Midstream Partners, LP,” the “Partnership,” “ENLK,” or like terms refer to EnLink Midstream Partners, LP itself or EnLink Midstream Partners, LP together with its consolidated subsidiaries, including the Operating Partnership and EOGP.

Please read the notes to the consolidated financial statements in conjunction with the Definitions page set forth in this report prior to Part I—Financial Information.

a.Organization of Business

EnLink Midstream, LLC is a publicly traded Delaware limited liability company formed in October 2013. The Company’s common units are traded on the New York Stock Exchange under the symbol “ENLC.”

Transfer of EOGP Interest

On January 31, 2019, ENLC transferred its 16.1% limited partner interest in EOGP to the Operating Partnership in exchange for 55,827,221 ENLK common units, resulting in the Operating Partnership owning 100% of the limited partner interests in EOGP.

Simplification of the Corporate Structure

On October 21, 2018, ENLK, ENLC, the General Partner, the managing member of ENLC, and NOLA Merger Sub entered into the Merger Agreement pursuant to which, on January 25, 2019, NOLA Merger Sub merged with and into ENLK, with ENLK continuing as the surviving entity and as a subsidiary of ENLC. As a result of the Merger:

Each issued and outstanding ENLK common unit (except for ENLK common units held by ENLC and its subsidiaries) was converted into 1.15 ENLC common units, which resulted in the issuance of 304,822,035 ENLC common units.

The General Partner’s incentive distribution rights in ENLK were eliminated.

The Series B Preferred Units continue to be issued and outstanding, except that certain terms of the Series B Preferred Units have been modified pursuant to an amended partnership agreement of ENLK. See “Note 8—Certain Provisions of the Partnership Agreement” for additional information regarding the modified terms of the Series B Preferred Units.

ENLC issued to Enfield, the current holder of the Series B Preferred Units, for no additional consideration, ENLC Class C Common Units equal to the number of Series B Preferred Units held by Enfield immediately prior to the effective time of the Merger, in order to provide Enfield with certain voting rights with respect to ENLC. For each additional Series B Preferred Unit issued by ENLK in quarterly in-kind distributions, ENLC will issue an additional ENLC Class C Common Unit to the applicable holder of such Series B Preferred Unit. In addition, for each Series B Preferred Unit that is exchanged into an ENLC common unit, an ENLC Class C Common Unit will be canceled.

The Series C Preferred Units and all of ENLK’s then-existing senior notes continue to be issued and outstanding following the Merger.

Each unit-based award issued and outstanding immediately prior to the effective time of the Merger under the GP Plan has been converted into an award with respect to ENLC common units with substantially similar terms as were in effect immediately prior to the effective time.

11

ENLINK MIDSTREAM, LLC AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)
(Unaudited)

Each unit-based award with performance-based vesting conditions issued and outstanding immediately prior to the effective time of the Merger under the GP Plan and the 2014 Plan has been modified such that the performance metric for such award relates (on a weighted average basis) to (i) the combined performance of ENLC and ENLK for periods preceding the effective time of the Merger and (ii) the performance of ENLC for periods on and after the effective time of the Merger.

ENLC assumed the outstanding debt under the Term Loan and ENLK became a guarantor thereof. See “Note 6—Long-Term Debt” for additional information regarding the Term Loan.

We refinanced our existing revolving credit facilities at ENLK and ENLC. In connection with the Merger, we entered into the Consolidated Credit Facility, with respect to which ENLK is a guarantor. See “Note 6—Long-Term Debt” for additional information regarding the Consolidated Credit Facility.

We were required to allocate the goodwill in our Corporate reporting unit previously associated with the incentive distribution rights in ENLK granted to the General Partner which were created at the formation of ENLC in 2014, to the Permian, North Texas, Oklahoma, and Louisiana reporting units. See “Note 3—Goodwill and Intangible Assets” for more information on this transaction.

We reduced our DTL by $399.0 million related to ENLC’s step-up in basis of ENLK’s underlying assets with the offsetting credit in members’ equity. See “Note 7—Income Taxes” for more information on the DTA.

b.Nature of Business

We primarily focus on providing midstream energy services, including:

gathering, compressing, treating, processing, transporting, storing, and selling natural gas;
fractionating, transporting, storing, and selling NGLs; and
gathering, transporting, stabilizing, storing, trans-loading, and selling crude oil and condensate, in addition to brine disposal services.

Our natural gas business includes connecting the wells of producers in our market areas to our gathering systems. Our gathering systems consist of networks of pipelines that collect natural gas from points at or near producing wells and transport it to our processing plants or to larger pipelines for further transmission. We operate processing plants that remove NGLs from the natural gas stream that is transported to the processing plants by our own gathering systems or by third-party pipelines. In conjunction with our gathering and processing business, we may purchase natural gas and NGLs from producers and other supply sources and sell that natural gas or NGLs to utilities, industrial consumers, marketers, and pipelines. Our transmission pipelines receive natural gas from our gathering systems and from third-party gathering and transmission systems and deliver natural gas to industrial end-users, utilities, and other pipelines.

Our fractionators separate NGLs into separate purity products, including ethane, propane, iso-butane, normal butane, and natural gasoline. Our fractionators receive NGLs primarily through our transmission lines that transport NGLs from east Texas and from our south Louisiana processing plants. Our fractionators also have the capability to receive NGLs by truck or rail terminals. We also have agreements pursuant to which third parties transport NGLs from our west Texas and central Oklahoma operations to our NGL transmission lines that then transport the NGLs to our fractionators. In addition, we have NGL storage capacity to provide storage for customers.

Our crude oil and condensate business includes the gathering and transmission of crude oil and condensate via pipelines, barges, rail, and trucks, in addition to condensate stabilization and brine disposal. We also purchase crude oil and condensate from producers and other supply sources and sell that crude oil and condensate through our terminal facilities to various markets.

Across our businesses, we primarily earn our fees through various fee-based contractual arrangements, which include stated fee-only contract arrangements or arrangements with fee-based components where we purchase and resell commodities in connection with providing the related service and earn a net margin as our fee. We earn our net margin under our purchase and resell contract arrangements primarily as a result of stated service-related fees that are deducted from the price of the commodities purchased. While our transactions vary in form, the essential element of most of our transactions is the use of our assets to transport a product or provide a processed product to an end-user or marketer at the tailgate of the plant, pipeline, or barge, truck, or rail terminal.

12

ENLINK MIDSTREAM, LLC AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)
(Unaudited)

(2) Significant Accounting Policies

a.Basis of Presentation

The accompanying consolidated financial statements are prepared in accordance with the instructions to Form 10-Q, are unaudited, and do not include all the information and disclosures required by GAAP for complete financial statements. All adjustments that, in the opinion of management, are necessary for a fair presentation of the results of operations for the interim periods have been made and are of a recurring nature unless otherwise disclosed herein. The results of operations for such interim periods are not necessarily indicative of results of operations for a full year. These consolidated financial statements should be read in conjunction with the consolidated financial statements and accompanying notes included in our Annual Report on Form 10-K for the year ended December 31, 2018. Certain reclassifications were made to the financial statements for the prior period to conform to current period presentation. The effect of these reclassifications had no impact on previously reported members’ equity or net income (loss). All significant intercompany balances and transactions have been eliminated in consolidation.

b.Revenue Recognition

Minimum Volume Commitments and Firm Transportation Contracts

Certain of our gathering and processing agreements provide for quarterly or annual MVCs. Under these agreements, our customers or suppliers agree to ship and/or process a minimum volume of product on our systems over an agreed time period. If a customer or supplier under such an agreement fails to meet its MVC for a specified period, the customer is obligated to pay a contractually-determined fee based upon the shortfall between actual product volumes and the MVC for that period. Some of these agreements also contain make-up right provisions that allow a customer or supplier to utilize gathering or processing fees in excess of the MVC in subsequent periods to offset shortfall amounts in previous periods. We record revenue under MVC contracts during periods of shortfall when it is known that the customer cannot, or will not, make up the deficiency in subsequent periods. Deficiency fee revenue is included in midstream services revenue.

For our firm transportation contracts, we transport commodities owned by others for a stated monthly fee for a specified monthly quantity with an additional fee based on actual volumes. We include transportation fees from firm transportation contracts in our midstream services revenue.

The following table summarizes the contractually committed fees that we expect to recognize in our consolidated statements of operations, in either revenue or reductions to cost of sales, from MVC and firm transportation contractual provisions. All amounts in the table below are determined using the contractually-stated MVC or firm transportation volumes specified for each period multiplied by the relevant deficiency or reservation fee. Actual amounts could differ due to the timing of revenue recognition or reductions to cost of sales resulting from make-up right provisions included in our agreements, as well as due to nonpayment or nonperformance by our customers. These fees do not represent the shortfall amounts we expect to collect under our MVC contracts, as we generally do not expect volume shortfalls to equal the full amount of the contractual MVCs during these periods. For example, for the three and nine months ended September 30, 2019, we had contractual commitments of $38.9 million and $113.6 million under our MVC contracts, respectively, and recorded $6.5 million and $14.2 million of revenue due to volume shortfalls, respectively.

MVC and Firm Transportation Commitments (1)
2019 (remaining)$58.9  
2020259.8  
2021108.1  
202294.7  
202385.7  
Thereafter237.0  
Total$844.2  
____________________________
(1)Amounts do not represent expected shortfall under these commitments.

13

ENLINK MIDSTREAM, LLC AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)
(Unaudited)

c.Secured Term Loan Receivable

In late May 2019, White Star, the counterparty to our $58.0 million second lien secured term loan receivable, filed for reorganization under Chapter 11 of the U.S. Bankruptcy Code. Under the original term loan agreement executed in May 2018, White Star was scheduled to make an installment payment of $19.5 million in April 2019. In November 2018 and again in February 2019, we amended the installment payment terms with the result that the single 2019 installment payment was split into two payments of $9.75 million in May 2019 and $10.75 million in October 2019. White Star defaulted on its May 2019 installment payment prior to filing for reorganization under Chapter 11 of the U.S. Bankruptcy Code. While the outcome of the bankruptcy proceeding is not yet finalized, we do not believe that it is probable that White Star will be able to repay the outstanding amounts owed to us under the second lien secured term loan. As a result, we have recorded a $52.9 million loss in our consolidated statement of operations for the nine months ended September 30, 2019, which represents a full write-down of the second lien secured term loan.

d.Accounting Standards to be Adopted in Future Periods

On August 29, 2018, the FASB issued ASU 2018-15, Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract (“ASU 2018-15”), which amends ASC 350-40, Internal-Use Software (“ASC 350-40”) to address a customer’s accounting for implementation costs incurred in a cloud computing arrangement that is a service contract. ASU 2018-15 aligns the accounting for costs incurred to implement a cloud computing arrangement that is a service arrangement with the guidance on capitalizing costs associated with developing or obtaining internal-use software. Specifically, the ASU amends ASC 350-40 to include in its scope implementation costs of a cloud computing arrangement that is a service contract and clarifies that a customer should apply ASC 350-40 to determine which implementation costs should be capitalized in a cloud computing arrangement that is considered a service contract. We do not believe ASU 2018-15 will have a material impact on our financial statements, except to the extent future costs incurred in a cloud computing arrangement are capitalizable, the corresponding amortization will be included in “Operating expenses” or “General and administrative” in the consolidated statement of operations, rather than “Depreciation and amortization.” We will adopt ASU 2018-15 prospectively effective January 1, 2020.

e.Adopted Accounting Standards

Effective January 1, 2019, we adopted ASC 842, Leases, using the modified retrospective approach whereby we recognized leases on our consolidated balance sheet by recording a right-of-use asset and lease liability. We applied certain practical expedients that were allowed in the adoption of ASC 842, including not reassessing existing contracts for lease arrangements, not reassessing existing lease classification, not recording a right-of-use asset or lease liability for leases of twelve months or less, and not separating lease and non-lease components of a lease arrangement. In connection with the adoption of ASC 842 in January 2019, we recorded a lease liability of $97.6 million, a right-of-use asset of $75.3 million, and a reduction of $22.6 million in other liabilities previously recorded related to lease incentives. For additional information about our adoption of ASC 842, refer to “Note 5—Leases.”

(3) Goodwill and Intangible Assets

Goodwill

In March 2014, at the time of our transactions with Devon that led us to become publicly held, we recorded goodwill in our corporate reporting unit at ENLC that was associated with the General Partner’s incentive distribution rights in ENLK. Prior to the completion of the Merger in January 2019, ENLC’s aggregate fair value of its reporting units was in excess of the consolidated book value of its assets, including all goodwill, which did not result in a goodwill impairment on a consolidated basis. Upon the completion of the Merger, in accordance with ASC 350, Intangibles-Goodwill and Other (“ASC 350”), the portion of goodwill in our corporate reporting unit that was previously associated with the General Partner’s incentive distribution rights in ENLK was required to be reallocated to the four remaining reporting units based on the relative fair value of each of the reporting units. Due to the application of ASC 350, we were required to allocate goodwill to reporting units at which goodwill had previously been impaired due to book value being in excess of fair value. We recognized a $186.5 million goodwill impairment related to our Louisiana segment during the first quarter of 2019. During the third quarter of 2019, we performed an interim impairment test due to a significant decline in our unit price from the first quarter and downward revisions in our estimated future cash flows due to delays in development plans announced by certain of our major customers. For the three months ended September 30, 2019, we determined that no impairments of goodwill were required as of September 30, 2019.

14

ENLINK MIDSTREAM, LLC AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)
(Unaudited)

The table below provides a summary of our change in carrying amount of goodwill by segment (in millions) for the nine months ended September 30, 2019. For the three months ended September 30, 2019 and 2018 and nine months ended September 30, 2018, there were no changes to the carrying amounts of goodwill.

PermianNorth TexasOklahomaLouisianaCorporateTotals
Nine Months Ended September 30, 2019
Balance, beginning of period$—  $—  $190.3  $—  $1,119.9  $1,310.2  
Goodwill allocation184.6  125.7  623.1  186.5  (1,119.9) —  
Impairment—  —  —  (186.5) —  (186.5) 
Balance, end of period$184.6  $125.7  $813.4  $—  $—  $1,123.7  

Intangible Assets

Intangible assets associated with customer relationships are amortized on a straight-line basis over the expected period of benefits of the customer relationships, which range from 5 to 20 years.

The following table represents our change in carrying value of intangible assets (in millions):
Gross Carrying AmountAccumulated AmortizationNet Carrying Amount
Nine Months Ended September 30, 2019
Customer relationships, beginning of period$1,795.8  $(422.2) $1,373.6  
Amortization expense—  (92.8) (92.8) 
Customer relationships, end of period$1,795.8  $(515.0) $1,280.8  

The weighted average amortization period is 15.0 years. Amortization expense was $30.9 million for each of the three months ended September 30, 2019 and 2018, and $92.8 million and $92.6 million for the nine months ended September 30, 2019 and 2018, respectively.

The following table summarizes our estimated aggregate amortization expense for the next five years and thereafter (in millions):

2019 (remaining)$30.9  
2020123.7  
2021123.7  
2022123.7  
2023123.6  
Thereafter755.2  
Total$1,280.8  

(4) Related Party Transactions

a.Transactions with ENLK

Simplification of the Corporate Structure. On October 21, 2018, ENLK, ENLC, the General Partner, the managing member of ENLC, and NOLA Merger Sub entered into the Merger Agreement pursuant to which, on January 25, 2019, NOLA Merger Sub merged with and into ENLK, with ENLK continuing as the surviving entity and as a subsidiary of ENLC. See “Note 1—General” for more information on this transaction.

Transfer of EOGP Interest. On January 31, 2019, ENLC transferred its 16.1% limited partner interest in EOGP to the Operating Partnership in exchange for 55,827,221 ENLK common units, resulting in the Operating Partnership owning 100% of the limited partner interests in EOGP.

15

ENLINK MIDSTREAM, LLC AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)
(Unaudited)

b.Transactions with Devon

On July 18, 2018, subsidiaries of Devon sold all of their equity interests in ENLK, ENLC, and the managing member of ENLC to GIP for aggregate consideration of $3.125 billion. Accordingly, Devon is no longer an affiliate of ENLK or ENLC. The sale did not affect our commercial arrangements with Devon, except that Devon agreed to extend through 2029 certain existing fixed-fee gathering and processing contracts related to the Bridgeport plant in north Texas and the Cana plant in Oklahoma. Prior to July 18, 2018, revenues from transactions with Devon are included in “Product sales—related parties” or “Midstream services—related parties” in the consolidated statement of operations. Revenues from transactions with Devon after July 18, 2018 are included in “Product sales” or “Midstream services” in the consolidated statement of operations.

For the three and nine months ended September 30, 2018, related party revenues from Devon accounted for 2.0% and 7.3%, respectively, of our revenues.

c.Transactions with Cedar Cove JV

For the three and nine months ended September 30, 2019, we recorded cost of sales of $4.1 million and $18.0 million, respectively, and for the three and nine months ended September 30, 2018, we recorded cost of sales of $11.3 million and $33.8 million, respectively, related to our purchase of residue gas and NGLs from the Cedar Cove JV subsequent to processing at our central Oklahoma processing facilities. We had no accounts receivable balances related to transactions with the Cedar Cove JV at September 30, 2019 and $0.7 million at December 31, 2018. Additionally, we had accounts payable balances related to transactions with the Cedar Cove JV of $3.6 million and $4.3 million at September 30, 2019 and December 31, 2018, respectively.

Management believes the foregoing transactions with related parties were executed on terms that are fair and reasonable to us. The amounts related to related party transactions are specified in the accompanying consolidated financial statements.

(5) Leases

Effective with the adoption of ASC 842 in January 2019, we evaluate new contracts at inception to determine if the contract conveys the right to control the use of an identified asset for a period of time in exchange for periodic payments. A lease exists if we obtain substantially all of the economic benefits of an asset, and we have the right to direct the use of that asset. When a lease exists, we record a right-of-use asset that represents our right to use the asset over the lease term and a lease liability that represents our obligation to make payments over the lease term. Lease liabilities are recorded at the sum of future lease payments discounted by the collateralized rate we could obtain to lease a similar asset over a similar period, and right-of-use assets are recorded equal to the corresponding lease liability, plus any prepaid or direct costs incurred to enter the lease, less the cost of any incentives received from the lessor. The majority of our leases are for the following types of assets:

Office space. Our primary offices are in Dallas, Houston, and Midland, with smaller offices in other locations near our assets. Our office leases are long-term in nature and represent $61.3 million of our lease liability and $40.6 million of our right-of-use asset as of September 30, 2019. These office leases typically include variable lease costs related to utility expenses, which are determined based on our pro-rata share of the building expenses each month and expensed as incurred.

Compression and other field equipment. We pay third parties to provide compressors or other field equipment for our assets. Under these agreements, a third party installs and operates compressor units based on specifications set by us to meet our compression needs at specific locations. While the third party determines which compressors to install and operates and maintains the units, we have the right to control the use of the compressors and are the sole economic beneficiary of the identified assets. These agreements are typically for an initial term of one to three years but will automatically renew from month to month until canceled by us or the lessor. Compression and other field equipment rentals represent $26.4 million of our lease liability and $26.3 million of our right-of-use asset as of September 30, 2019. Under certain agreements, we may incur variable lease costs related to incidental services provided by the equipment lessor, which are expensed as incurred.

Office equipment. We rent office equipment for a monthly fee. These leases are typically for several years and represent $0.7 million of our lease liability and $0.7 million of our right-of-use asset as of September 30, 2019.

16

ENLINK MIDSTREAM, LLC AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)
(Unaudited)

Land and land easements. We make periodic payments to lease land or to have access to our assets. Land leases and easements are typically long-term to match the expected useful life of the corresponding asset and represent $15.1 million of our lease liability and $13.0 million of our right-of-use asset as of September 30, 2019.
Lease balances are recorded on the consolidated balance sheets as follows (in millions):
September 30, 2019
Operating leases:
Other assets, net$80.6  
Other current liabilities$21.3  
Other long-term liabilities$82.2  
Other lease information
Weighted-average remaining lease term—Operating leases10.7 years
Weighted-average discount rate—Operating leases5.2 %

Certain of our lease agreements have options to extend the lease for a certain period after the expiration of the initial term. We recognize the cost of a lease over the expected total term of the lease, including optional renewal periods that we can reasonably expect to exercise. We do not have material obligations whereby we guarantee a residual value on assets we lease, nor do our lease agreements impose restrictions or covenants that could affect our ability to make distributions.

Lease expense is recognized on the consolidated statements of operations as “Operating expenses” and “General and administrative” depending on the nature of the leased asset. The components of total lease expense are as follows (in millions):
Three Months Ended September 30,Nine Months Ended September 30,
20192019
Finance lease expense:
Amortization of right-of-use asset$2.2  $5.2  
Interest on lease liability0.1  0.1  
Operating lease expense:
Long-term operating lease expense7.2  21.8  
Short-term lease expense9.5  25.3  
Variable lease expense1.3  4.3  
Total lease expense$20.3  $56.7  

Other information about our leases is presented below (in millions):
Three Months Ended September 30,Nine Months Ended September 30,
20192019
Supplemental cash flow information:
Cash payments for finance leases included in cash flows from financing activities$0.4  $1.2  
Cash payments for operating leases included in cash flows from operating activities$7.2  $22.6  
Right-of-use assets obtained in exchange for operating lease liabilities$3.2  $98.4  

17

ENLINK MIDSTREAM, LLC AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)
(Unaudited)

The following table summarizes the maturity of our lease liability as of September 30, 2019 (in millions):

Total2019 (remaining)2020202120222023Thereafter
Undiscounted operating lease liability$142.7  $6.7  $23.5  $17.1  $10.2  $9.0  $76.2  
Reduction due to present value(39.2) (1.3) (4.5) (3.8) (3.4) (3.1) (23.1) 
Operating lease liability103.5  5.4  19.0  13.3  6.8  5.9  53.1  
Total lease liability$103.5  $5.4  $19.0  $13.3  $6.8  $5.9  $53.1  

18

ENLINK MIDSTREAM, LLC AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)
(Unaudited)

(6) Long-Term Debt

As of September 30, 2019 and December 31, 2018, long-term debt consisted of the following (in millions):

September 30, 2019December 31, 2018
Outstanding PrincipalPremium (Discount)Long-Term DebtOutstanding PrincipalPremium (Discount)Long-Term Debt
ENLC Credit Facility, due 2019 (1) $—  $—  $—  $111.4  $—  $111.4  
Consolidated Credit Facility due 2024 (2)275.0  —  275.0  —  —  —  
Term Loan due 2021 (3)850.0  —  850.0  850.0  —  850.0  
ENLK’s 2.70% Senior unsecured notes due 2019 (4)—  —  —  400.0  —  400.0  
ENLK’s 4.40% Senior unsecured notes due 2024550.0  1.6  551.6  550.0  1.8  551.8  
ENLK’s 4.15% Senior unsecured notes due 2025750.0  (0.7) 749.3  750.0  (0.9) 749.1  
ENLK’s 4.85% Senior unsecured notes due 2026500.0  (0.5) 499.5  500.0  (0.5) 499.5  
ENLC’s 5.375% Senior unsecured notes due 2029500.0  —  500.0  —  —  —  
ENLK’s 5.60% Senior unsecured notes due 2044350.0  (0.2) 349.8  350.0  (0.2) 349.8  
ENLK’s 5.05% Senior unsecured notes due 2045450.0  (6.0) 444.0  450.0  (6.2) 443.8  
ENLK’s 5.45% Senior unsecured notes due 2047500.0  (0.1) 499.9  500.0  (0.1) 499.9  
Debt classified as long-term, including current maturities of long-term debt$4,725.0  $(5.9) 4,719.1  $4,461.4  $(6.1) 4,455.3  
Debt issuance cost (5)(30.8) (24.5) 
Less: Current maturities of long-term debt (4)—  (399.8) 
Long-term debt, net of unamortized issuance cost$4,688.3  $4,031.0  
____________________________
(1)Bore interest based on Prime and/or LIBOR plus an applicable margin. The effective interest rate was 4.4% at December 31, 2018. In connection with the closing of the Merger, the ENLC Credit Facility was canceled, and all outstanding borrowings were refinanced through borrowings on the Consolidated Credit Facility. Since the borrowings under the ENLC Credit Facility were refinanced with long-term debt, they are classified as “Long-term debt” on the consolidated balance sheet as of December 31, 2018.
(2)Bears interest based on Prime and/or LIBOR plus an applicable margin. The effective interest rate was 3.7% at September 30, 2019.
(3)Bears interest based on Prime and/or LIBOR plus an applicable margin. The effective interest rate was 3.5% and 3.9% at September 30, 2019 and December 31, 2018, respectively.
(4)ENLK’s 2.70% senior unsecured notes matured on April 1, 2019. Therefore, the outstanding principal balance, net of discount and debt issuance costs, is classified as “Current maturities of long-term debt” on the consolidated balance sheet as of December 31, 2018.
(5)Net of amortization of $9.8 million and $16.5 million at September 30, 2019 and December 31, 2018, respectively.

Issuance and Repayment of Senior Unsecured Notes

On April 9, 2019, ENLC issued $500.0 million in aggregate principal amount of ENLC’s 5.375% senior unsecured notes due June 1, 2029 (the “2029 Notes”) at a price to the public of 100% of their face value. Interest payments on the 2029 Notes are payable on June 1 and December 1 of each year, beginning December 1, 2019. The 2029 Notes are fully and unconditionally guaranteed by ENLK. Net proceeds of approximately $496.5 million were used to repay outstanding borrowings under the Consolidated Credit Facility, including borrowings incurred on April 1, 2019 to repay at maturity all of the $400.0 million outstanding aggregate principal amount of ENLK’s 2.70% senior unsecured notes due 2019, and for general limited liability company purposes.

Consolidated Credit Facility

On December 11, 2018, ENLC entered into the Consolidated Credit Facility, which permits ENLC to borrow up to $1.75 billion on a revolving credit basis and includes a $500.0 million letter of credit subfacility. The Consolidated Credit Facility became available for borrowings and letters of credit upon closing of the Merger. In addition, ENLK became a guarantor under the Consolidated Credit Facility upon the closing of the Merger. In the event that ENLC defaults on the Consolidated Credit Facility, ENLK will be liable for the entire outstanding balance ($275.0 million as of September 30, 2019), and 105% of the
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Notes to Consolidated Financial Statements (Continued)
(Unaudited)

outstanding letters of credit under the Consolidated Credit Facility ($4.0 million as of September 30, 2019). The obligations under the Consolidated Credit Facility are unsecured.
The Consolidated Credit Facility includes provisions for additional financial institutions to become lenders, or for any existing lender to increase its revolving commitment thereunder, subject to an aggregate maximum of $2.25 billion for all commitments under the Consolidated Credit Facility.
The Consolidated Credit Facility will mature on January 25, 2024, unless ENLC requests, and the requisite lenders agree, to extend it pursuant to its terms. The Consolidated Credit Facility contains certain financial, operational, and legal covenants. The financial covenants are tested on a quarterly basis, based on the rolling four-quarter period that ends on the last day of each fiscal quarter. The financial covenants include (i) maintaining a ratio of consolidated EBITDA (as defined in the Consolidated Credit Facility, which term includes projected EBITDA from certain capital expansion projects) to consolidated interest charges of no less than 2.5 to 1.0 at all times prior to the occurrence of an investment grade event (as defined in the Consolidated Credit Facility) and (ii) maintaining a ratio of consolidated indebtedness to consolidated EBITDA of no more than 5.0 to 1.0. If ENLC consummates one or more acquisitions in which the aggregate purchase price is $50.0 million or more, ENLC can elect to increase the maximum allowed ratio of consolidated indebtedness to consolidated EBITDA to 5.5 to 1.0 for the quarter in which the acquisition occurs and the three subsequent quarters.
Borrowings under the Consolidated Credit Facility bear interest at ENLC’s option at the Eurodollar Rate (the LIBOR Rate) plus an applicable margin (ranging from 1.125% to 2.00%) or the Base Rate (the highest of the Federal Funds Rate plus 0.50%, the 30-day Eurodollar Rate plus 1.0% or the administrative agent’s prime rate) plus an applicable margin (ranging from 0.125% to 1.00%). The applicable margins vary depending on ENLC’s debt rating. Upon breach by ENLC of certain covenants governing the Consolidated Credit Facility, amounts outstanding under the Consolidated Credit Facility, if any, may become due and payable immediately.

At September 30, 2019, we were in compliance with and expect to be in compliance with the covenants of the Consolidated Credit Facility for at least the next twelve months.

Term Loan

On December 11, 2018, ENLK entered into the Term Loan with Bank of America, N.A., as Administrative Agent, Bank of Montreal and Royal Bank of Canada, as Co-Syndication Agents, Citibank, N.A. and Wells Fargo Bank, National Association, as Co-Documentation Agents, and the lenders party thereto. On December 11, 2018, ENLK borrowed $850.0 million under the Term Loan and used the net proceeds to repay obligations outstanding under the ENLK Credit Facility. Upon the closing of the Merger, ENLC assumed ENLK’s obligations under the Term Loan, and ENLK became a guarantor of the Term Loan. In the event that ENLC defaults on the Term Loan, the outstanding balance immediately becomes due, and ENLK will be liable for any amount owed on the Term Loan not paid by ENLC. The outstanding balance of the Term Loan was $850.0 million as of September 30, 2019. The obligations under the Term Loan are unsecured.

The Term Loan will mature on December 10, 2021. The Term Loan contains certain financial, operational, and legal covenants. The financial covenants are tested on a quarterly basis, based on the rolling four-quarter period that ends on the last day of each fiscal quarter. The financial covenants include (i) maintaining a ratio of consolidated EBITDA (as defined in the Term Loan, which term includes projected EBITDA from certain capital expansion projects) to consolidated interest charges of no less than 2.5 to 1.0 at all times prior to the occurrence of an investment grade event (as defined in the Term Loan) and (ii) maintaining a ratio of consolidated indebtedness to consolidated EBITDA of no more than 5.0 to 1.0. If ENLC consummates one or more acquisitions in which the aggregate purchase price is $50.0 million or more, ENLC can elect to increase the maximum allowed ratio of consolidated indebtedness to consolidated EBITDA to 5.5 to 1.0 for the quarter in which the acquisition occurs and the three subsequent quarters.

Borrowings under the Term Loan bear interest at ENLC’s option at the Eurodollar Rate (the LIBOR Rate) plus an applicable margin (ranging from 1.0% to 1.75%) or the Base Rate (the highest of the Federal Funds Rate plus 0.5%, the 30-day Eurodollar Rate plus 1.0% or the administrative agent’s prime rate) plus an applicable margin (ranging from 0.0% to 0.75%). The applicable margins vary depending on ENLC’s debt rating. Upon breach by ENLC of certain covenants included in the Term Loan, amounts outstanding under the Term Loan may become due and payable immediately.

At September 30, 2019, we were in compliance with and expect to be in compliance with the covenants of the Term Loan for at least the next twelve months.

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Notes to Consolidated Financial Statements (Continued)
(Unaudited)

(7) Income Taxes

The components of our income tax expense are as follows (in millions):
Three Months Ended
September 30,
Nine Months Ended
September 30,
2019201820192018
Current income tax expense  $(0.7) $(1.0) $(2.0) $(1.9) 
Deferred income tax expense(5.6) (3.0) (0.7) (15.4) 
Income tax expense$(6.3) $(4.0) $(2.7) $(17.3) 

The following schedule reconciles total income tax expense and the amount calculated by applying the statutory U.S. federal tax rate to income (loss) before income taxes (in millions):
Three Months Ended
September 30,
Nine Months Ended
September 30,