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Enlink Midstream, Llc (ENLC) SEC Filing 10-Q Quarterly report for the period ending Tuesday, June 30, 2020

SEC Filings

Enlink Midstream, Llc

CIK: 1592000 Ticker: ENLC

 

Exhibit 99.1

 

 

 

FOR IMMEDIATE RELEASE

AUGUST 4, 2020

 

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 Second Quarter 2020 Results and Updates 2020 Guidance

 

DALLAS, August 4 — EnLink Midstream, LLC (NYSE: ENLC) (EnLink) reported financial results for the second quarter of 2020 and updated 2020 guidance metrics.

 

Highlights

Reported net income of $29.8 million and net cash provided by operating activities of $134.8 million for the second quarter of 2020.

 

Achieved adjusted EBITDA, net to EnLink, of $255.1 million for the second quarter of 2020, largely unchanged from the first quarter of 2020, driven by a focus on cost reductions and strong operational execution. EnLink is on track to achieve in the high end of its previously announced full-year 2020 guidance range of $950 million to $1.025 billion.

 

Delivered $72.0 million of excess free cash flow for the second quarter of 2020, positioning EnLink to meet or exceed the high end of its previously announced full-year 2020 guidance range of $260 million to $280 million.

 

Increased Permian segment profit by approximately 35% for the second quarter of 2020 as compared to the first quarter of 2020, through a combination of volume growth, cost reductions, commodity price improvements, and opportunistic margin opportunities captured by EnLink's crude oil storage assets.

 

Reduced expected full-year 2020 operating and general and administrative costs by an incremental $20 million, leading to approximately $120 million of aggregate operating and general and administrative cost savings compared to 2019.

 

Continued to achieve new company safety records, notably including 138 days without an employee recordable injury. EnLink continues to be a top-tier safety performer in the midstream industry.

 

"We have taken decisive steps to reposition EnLink as a self-funded company with the ability to generate significant excess free cash flow," Chairman and CEO Barry Davis said. "Our team has done great work to positively impact results and cost structure across our large and diverse footprint this year and will continue to do so as we navigate the dynamic road ahead. EnLink is committed to operational excellence, a disciplined investment approach, and maintaining strong financial flexibility in this challenging environment."

 

Adjusted EBITDA and excess free 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.

 


The following information was filed by Enlink Midstream, Llc (ENLC) on Tuesday, August 4, 2020 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 June 30, 2020

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 July 30, 2020, the Registrant had 489,593,387 common units outstanding.


TABLE OF CONTENTS


2

DEFINITIONS
 
The following terms as defined are used in this document:
Defined TermDefinition
/dPer day.
2014 PlanENLC’s 2014 Long-Term Incentive Plan.
ASCThe FASB Accounting Standards Codification.
ASC 350
ASC 350, Intangibles—Goodwill and Other.
ASC 842
ASC 842, Leases.
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.
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.
Delaware Basin
A large sedimentary basin in West Texas and New Mexico.
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 and the Tiger Plant located in the Delaware Basin in Texas.
DevonDevon Energy Corporation.
ENLCEnLink Midstream, LLC.
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.
ENLKEnLink Midstream Partners, LP or, when applicable, EnLink Midstream Partners, LP together with its consolidated subsidiaries. Also referred to as the “Partnership.”
FASBFinancial Accounting Standards Board.
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.
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.
GP Plan
The General Partner’s Long-Term Incentive Plan.
Gross Operating MarginRevenue less cost of sales. Gross Operating Margin is a non-GAAP financial measure. See “Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations—Non-GAAP Financial Measures” for additional information.
ISDAsInternational Swaps and Derivatives Association Agreements.
Legacy ENLK AwardsUnit-based awards granted under the GP Plan prior to the Merger. As of the closing of the Merger, Legacy ENLK Awards converted into ENLC unit-based awards using the 1.15 exchange ratio from the Merger Agreement as the conversion rate. No additional awards will be granted under the GP Plan.
Managing MemberEnLink Midstream Manager, LLC, the managing member of ENLC.
MergerOn January 25, 2019, NOLA Merger Sub, LLC (previously a wholly-owned subsidiary of ENLC) merged with and into ENLK with ENLK continuing as the surviving entity and a subsidiary of ENLC.
3

Merger AgreementThe Agreement and Plan of Merger, dated as of October 21, 2018, by and among ENLK, the General Partner, ENLC, the Managing Member, and NOLA Merger Sub, LLC (previously a wholly-owned subsidiary of ENLC prior to the Merger) related to the Merger.
MMbblsMillion barrels.
MMbtuMillion British thermal units.
MMcfMillion cubic feet.
MVCMinimum volume commitment.
NGLNatural gas liquid.
NGPNGP Natural Resources XI, LP.
OPEC+
Organization of the Petroleum Exporting Countries and its broader partners.
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.
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.
Tiger PlantA gas processing plant that is under construction in the Delaware Basin and is owned by the Delaware Basin JV.
White StarWhite Star Petroleum, LLC.

4

PART I—FINANCIAL INFORMATION
Item 1. Financial Statements
ENLINK MIDSTREAM, LLC AND SUBSIDIARIES
Consolidated Balance Sheets
(In millions, except unit data)
June 30, 2020December 31, 2019
(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents$52.0  $77.4  
Accounts receivable:
Trade, net of allowance for bad debt of $0.5 and $0.5, respectively
82.0  36.2  
Accrued revenue and other304.7  460.1  
Fair value of derivative assets9.9  12.9  
Other current assets58.6  57.8  
Total current assets507.2  644.4  
Property and equipment, net of accumulated depreciation of $3,654.7 and $3,418.6, respectively
6,828.7  7,081.3  
Intangible assets, net of accumulated amortization of $607.1 and $545.9, respectively
1,187.1  1,249.9  
Goodwill—  184.6  
Investment in unconsolidated affiliates42.1  43.1  
Fair value of derivative assets5.8  4.3  
Other assets, net147.9  128.2  
Total assets$8,718.8  $9,335.8  
LIABILITIES AND MEMBERS’ EQUITY
Current liabilities:
Accounts payable and drafts payable$49.4  $70.6  
Accounts payable to related party0.4  1.1  
Accrued gas, NGLs, condensate, and crude oil purchases188.8  354.8  
Fair value of derivative liabilities31.3  14.4  
Other current liabilities160.2  206.2  
Total current liabilities430.1  647.1  
Long-term debt4,749.0  4,764.3  
Asset retirement obligations15.9  15.5  
Other long-term liabilities84.8  90.8  
Fair value of derivative liabilities9.4  6.8  

Redeemable non-controlling interest—  5.2  
Members’ equity:
Members’ equity (489,463,987 and 487,791,612 units issued and outstanding, respectively)
1,728.5  2,135.5  
Accumulated other comprehensive loss(22.6) (11.0) 
Non-controlling interest1,723.7  1,681.6  
Total members’ equity3,429.6  3,806.1  
Total liabilities and members’ equity$8,718.8  $9,335.8  








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
June 30,
Six Months Ended
June 30,
2020201920202019
(Unaudited)
Revenues:
Product sales$532.6  $1,450.4  $1,425.5  $2,981.3  
Midstream services234.7  252.7  478.7  499.2  
Gain (loss) on derivative activity(22.4) 6.9  (3.2) 8.7  
Total revenues744.9  1,710.0  1,901.0  3,489.2  
Operating costs and expenses:
Cost of sales397.7  1,300.1  1,153.0  2,663.5  
Operating expenses88.1  117.9  188.8  232.4  
General and administrative23.5  32.2  53.9  83.6  
Loss on disposition of assets5.2  0.1  4.6  0.1  
Depreciation and amortization158.2  153.7  321.0  305.8  
Impairments1.5  —  354.5  186.5  
Loss on secured term loan receivable—  52.9  —  52.9  
Total operating costs and expenses674.2  1,656.9  2,075.8  3,524.8  
Operating income (loss)70.7  53.1  (174.8) (35.6) 
Other income (expense):
Interest expense, net of interest income(55.2) (54.3) (110.8) (103.9) 
Gain on extinguishment of debt26.7  —  32.0  —  
Income (loss) from unconsolidated affiliates(0.7) 4.7  1.0  10.0  
Other income—  0.2  —  0.2  
Total other expense(29.2) (49.4) (77.8) (93.7) 
Income (loss) before non-controlling interest and income taxes41.5  3.7  (252.6) (129.3) 
Income tax benefit (expense)(11.7) 5.4  22.0  3.6  
Net income (loss)29.8  9.1  (230.6) (125.7) 
Net income attributable to non-controlling interest25.7  25.2  52.1  66.7  
Net income (loss) attributable to ENLC$4.1  $(16.1) $(282.7) $(192.4) 
Net income (loss) attributable to ENLC per unit:
Basic common unit$0.01  $(0.03) $(0.58) $(0.44) 
Diluted common unit$0.01  $(0.03) $(0.58) $(0.44) 
















See accompanying notes to consolidated financial statements.
6

ENLINK MIDSTREAM, LLC AND SUBSIDIARIES
Consolidated Statements of Comprehensive Income (Loss)
(In millions)
Three Months Ended
June 30,
Six Months Ended
June 30,
2020201920202019
(Unaudited)
Net income (loss)$29.8  $9.1  $(230.6) $(125.7) 
Gain (loss) on designated cash flow hedge (1)1.5  (9.9) (11.6) (9.9) 
Comprehensive income (loss)31.3  (0.8) (242.2) (135.6) 
Comprehensive income attributable to non-controlling interest25.7  25.2  52.1  66.7  
Comprehensive income (loss) attributable to ENLC$5.6  $(26.0) $(294.3) $(202.3) 
____________________________
(1)Includes a tax expense of $0.5 million and a tax benefit of $3.5 million for the three and six months ended June 30, 2020, respectively, and a tax benefit of $3.6 million for the three and six months ended June 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, 2019$2,135.5  487.8  $(11.0) $1,681.6  $3,806.1  $5.2  
Conversion of restricted units for common units, net of units withheld for taxes(4.0) 1.3  —  —  (4.0) —  
Unit-based compensation12.3  —  —  —  12.3  —  
Contributions from non-controlling interests—  —  —  37.1  37.1  —  
Distributions(93.3) —  —  (24.4) (117.7) (0.3) 
Loss on designated cash flow hedge (1)—  —  (13.1) —  (13.1) —  
Redemption of non-controlling interest—  —  —  —  —  (4.0) 
Fair value adjustment related to redeemable non-controlling interest0.7  —  —  —  0.7  (0.9) 
Net income (loss)(286.8) —  —  26.4  (260.4) —  
Balance, March 31, 20201,764.4  489.1  (24.1) 1,720.7  3,461.0  —  
Conversion of restricted units for common units, net of units withheld for taxes(0.3) 0.4  —  —  (0.3) —  
Unit-based compensation6.8  —  —  —  6.8  —  
Contributions from non-controlling interests—  —  —  13.2  13.2  —  
Distributions(46.5) —  —  (35.9) (82.4) —  
Gain on designated cash flow hedge (2)—  —  1.5  —  1.5  —  
Net income4.1  —  —  25.7  29.8  —  
Balance, June 30, 2020$1,728.5  489.5  $(22.6) $1,723.7  $3,429.6  $—  
____________________________
(1)Includes a tax benefit of $4.0 million.
(2)Includes a tax expense 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, 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, 2019$3,324.6  487.2  $(11.9) $1,634.0  $4,946.7  $5.8  
____________________________
(1)Includes a tax benefit of $3.6 million.




















See accompanying notes to consolidated financial statements.
9

ENLINK MIDSTREAM, LLC AND SUBSIDIARIES
Consolidated Statements of Cash Flows
(In millions)
Six Months Ended
June 30,
20202019
(Unaudited)
Cash flows from operating activities:
Net loss$(230.6) $(125.7) 
Adjustments to reconcile net loss to net cash provided by operating activities:
Impairments354.5  186.5  
Depreciation and amortization321.0  305.8  
Loss on secured term loan receivable —  52.9  
Deferred income tax benefit(22.7) (4.9) 
Non-cash unit-based compensation16.2  19.1  
(Gain) loss on derivatives recognized in net loss3.2  (8.7) 
Cash settlements on derivatives2.8  4.9  
Gain on extinguishment of debt(32.0) —  
Amortization of debt issue costs, net discount (premium) of notes2.2  2.9  
Distribution of earnings from unconsolidated affiliates1.2  9.7  
Income from unconsolidated affiliates(1.0) (10.0) 
Other operating activities4.1  (3.0) 
Changes in assets and liabilities:
Accounts receivable, accrued revenue, and other109.8  270.7  
Natural gas and NGLs inventory, prepaid expenses, and other9.3  (7.4) 
Accounts payable, accrued product purchases, and other accrued liabilities(221.2) (171.3) 
Net cash provided by operating activities316.8  521.5  
Cash flows from investing activities:
Additions to property and equipment(203.6) (428.4) 
Other investing activities1.6  1.5  
Net cash used in investing activities(202.0) (426.9) 
Cash flows from financing activities:
Proceeds from borrowings490.0  2,320.0  
Payments on borrowings(476.0) (2,131.4) 
Debt financing costs—  (9.7) 
Conversion of restricted units, net of units withheld for taxes(4.3) (8.4) 
Distribution to members(139.8) (188.2) 
Distributions to non-controlling interests(60.6) (162.7) 
Contributions by non-controlling interests50.3  45.2  
Other financing activities0.2  (0.8) 
Net cash used in financing activities(140.2) (136.0) 
Net decrease in cash and cash equivalents(25.4) (41.4) 
Cash and cash equivalents, beginning of period77.4  100.4  
Cash and cash equivalents, end of period$52.0  $59.0  
Supplemental disclosures of cash flow information:
Cash paid for interest$106.6  $103.7  
Cash paid (refunded) for income taxes$(1.0) $1.2  
Non-cash investing activities:
Non-cash accrual of property and equipment$(19.6) $(5.8) 
Right-of-use assets obtained in exchange for operating lease liabilities$4.8  $95.2  
Non-cash financing activities:
Redemption of non-controlling interest$(4.0) $—  
 






See accompanying notes to consolidated financial statements.
10

ENLINK MIDSTREAM, LLC AND SUBSIDIARIES
Notes to Consolidated Financial Statements
June 30, 2020
(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.

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

ENLC is a 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.” ENLC owns all of the common units of ENLK, a Delaware limited partnership formed in 2002. EnLink Midstream GP, LLC, a Delaware limited liability company and our wholly-owned subsidiary, is ENLK’s general partner. The General Partner manages ENLK’s operations and activities.

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
11

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

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.

c.Current Market Environment

On March 11, 2020, the World Health Organization declared the ongoing coronavirus (COVID-19) outbreak a pandemic and recommended containment and mitigation measures worldwide. The pandemic has now reached every region of the globe and has resulted in widespread adverse impacts on the global economy, on the energy industry as a whole and on midstream companies, and on our customers, suppliers, and other parties with whom we have business relations. The pandemic and related travel and operational restrictions, as well as business closures and curtailed consumer activity, have resulted in a reduction in global demand for condensate, natural gas, and NGLs and especially crude oil. While reductions in global demand for natural gas and NGLs were never as severe as for crude oil and the demand for crude oil has recovered from the steepest drops in April and May, global demand for energy is still reduced as of the date of this report from levels before the pandemic in mid-February. The decline in demand, coupled with the failure of OPEC+ to quickly agree on oil production cuts, resulted in a decline in the market price for these commodities, most severely for crude oil. Although OPEC+ agreed to production cuts in April, extended these cuts through July, and are expected to continue the production cuts beyond July, although at a more moderate level, and although United States oil producers have also curtailed their drilling programs, these cuts have not been enough to fully offset demand loss attributable to the COVID-19 pandemic and market prices remain lower than prior to the pandemic.

As a result of the supply/demand imbalance, reduced commodity prices, and an uncertain timeline for recovery, oil and natural gas producers, including many of our customers, have curtailed their current drilling and production activity, including in some cases by shutting-in production, as well as reducing their plans for future drilling and production activity. As a result of these decreases in producer activity, we have experienced reduced volumes gathered, processed, fractionated, and transported on our assets in some of the regions that supply our systems.

There is considerable uncertainty regarding how long COVID-19 will persist and affect economic conditions and the extent and duration of changes in consumer behavior, such as the reluctance to travel, as well as governmental and other measures implemented to try to slow the spread of the virus, such as large-scale travel bans and restrictions, border closures, quarantines, shelter-in-place orders, and business and government shutdowns. As a result, there is significant uncertainty regarding how long the market dislocations will continue and how significantly and how long they will continue to affect us. We expect to see continued volatility in crude oil, condensate, natural gas, and NGL prices for the foreseeable future, which may, over the long term, adversely impact our business. A sustained significant decline in oil and natural gas exploration and production activities and related reduced demand for our services by our customers, whether due to decreases in consumer demand or reduction in the prices for oil, condensate natural gas and NGLs or otherwise, would have a material adverse effect on our business, liquidity, financial condition, results of operations, and cash flows (including our ability to make distributions to our unitholders).

(2) Significant Accounting Policies

a.Basis of Presentation

The accompanying consolidated financial statements have been 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, 2019. 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.

12

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

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 six months ended June 30, 2020, we had contractual commitments of $41.4 million and $83.2 million under our MVC contracts, respectively, and recorded $13.4 million and $25.2 million of revenue due to volume shortfalls, respectively.

MVC and Firm Transportation Commitments (in millions) (1)
2020 (remaining)$126.9  
2021115.1  
202299.8  
202390.5  
202477.0  
Thereafter143.3  
Total$652.6  
____________________________
(1)Amounts do not represent expected shortfall under these commitments.

c.Property and Equipment

Impairment Review. In accordance with ASC 360, Property, Plant, and Equipment, we evaluate long-lived assets of identifiable business activities for potential impairment whenever events or changes in circumstances indicate that their carrying value may not be recoverable. The carrying amount of a long-lived asset is not recoverable when it exceeds the undiscounted sum of the future cash flows expected to result from the use and eventual disposition of the asset. Estimates of expected future cash flows represent management’s best estimate based on reasonable and supportable assumptions. When the carrying amount of a long-lived asset is not recoverable, an impairment is recognized equal to the excess of the asset’s carrying value over its fair value, which is based on inputs that are not observable in the market, and thus represent Level 3 inputs.

For the three months ended June 30, 2020, we recognized a $1.5 million impairment on property and equipment related to cancelled projects. For the six months ended June 30, 2020, we recognized a $168.0 million impairment on property and equipment related to a portion of our Louisiana reporting segment because the carrying amounts were not recoverable based on our expected future cash flows, and a $1.9 million impairment related to certain cancelled projects.

13

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

d.Redeemable Non-Controlling Interest

Non-controlling interests that contain an option for the non-controlling interest holder to require us to purchase such interests for cash are considered to be redeemable non-controlling interests because the redemption feature is not deemed to be a freestanding financial instrument and because the redemption is not solely within our control. Redeemable non-controlling interests are not considered to be a component of members’ equity and are reported as temporary equity in the mezzanine section on the consolidated balance sheets. The amount recorded as a redeemable non-controlling interest at each balance sheet date is the greater of the redemption value and the carrying value of the redeemable non-controlling interest (the initial carrying value increased or decreased for the non-controlling interest holder’s share of net income or loss and distributions). When the redemption feature is exercised the redemption value of the non-controlling interest is reclassified to a liability on the consolidated balance sheets.

During the first quarter of 2020, a non-controlling interest holder in one of our non-wholly owned subsidiaries exercised its option to require us to purchase its remaining interest. We have recorded an estimated liability of $4.0 million related to the redemption of the non-controlling interest on the consolidated balance sheet as of June 30, 2020, but we have not yet agreed to a redemption value with the non-controlling interest holder.

e.Adopted Accounting Standards

Effective January 1, 2020, we adopted ASU 2018-15, Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract (Topic 350): Internal-Use Software. 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. For the three and six months ended June 30, 2020, we did not capitalize any cloud computing costs. However, 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 statements of operations, rather than “Depreciation and amortization.”

Effective January 1, 2020, we adopted ASU 2016-13, Financial Instruments—Credit Losses (Topic 326). The updates in ASU 2016-13 provide financial statement users with more information about the expected credit losses on financial instruments and other commitments to extend credit held by a reporting entity at each reporting date. Following the adoption of ASU 2016-13, we record an allowance for doubtful accounts based on our expectation of future losses. Because our receivables are typically paid within 30 days, and because we closely monitor the credit-worthiness of all our counterparties, adopting ASU 2016-13 did not have a material effect on our financial statements. However, in the event we foresee further or sustained deterioration in the current market environment, or other factors indicating an increased likelihood of defaults by our customers, we may recognize additional losses.

14

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

(3) Goodwill and Intangible Assets

Goodwill

We perform our goodwill assessments at the reporting unit level for all reporting units. We use a discounted cash flow analysis to perform the assessments. Key assumptions in the analysis include the use of an appropriate discount rate, terminal year cash flow multiples, and estimated future cash flows, including volume and price forecasts, capital expenditures, and estimated operating and general and administrative costs. In estimating cash flows, we incorporate current and historical market and financial information, among other factors. Impairment determinations involve significant assumptions and judgments, and differing assumptions regarding any of these inputs could have a significant effect on the various valuations.

Goodwill Impairment Analysis for the six months ended June 30, 2020

During March 2020, we determined that a sustained decline in our unit price and weakness in the overall energy sector, driven by low commodity prices and lower consumer demand due to the COVID-19 pandemic, caused a change in circumstances warranting an interim impairment test. Based on these triggering events, we performed a quantitative goodwill impairment analysis on the remaining goodwill in the Permian reporting unit. Based on this analysis, a goodwill impairment loss for our Permian reporting unit in the amount of $184.6 million was recognized as an impairment loss on the consolidated statement of operations for the six months ended June 30, 2020.

Goodwill Impairment Analysis for the six months ended June 30, 2019

During the first quarter of 2019, we recognized a $186.5 million goodwill impairment in our Louisiana reporting unit.

Intangible Assets

The following table represents our change in carrying value of intangible assets (in millions):
Gross Carrying AmountAccumulated AmortizationNet Carrying Amount
Six Months Ended June 30, 2020
Customer relationships, beginning of period$1,795.8  $(545.9) $1,249.9  
Amortization expense—  (61.8) (61.8) 
Retirements (1)(1.6) 0.6  (1.0) 
Customer relationships, end of period$1,794.2  $(607.1) $1,187.1  
____________________________
(1)Intangible assets retired as a result of the disposition of certain non-core 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 10 to 20 years.

The weighted average amortization period is 15.0 years. Amortization expense was $30.9 million and $31.0 million for the three months ended June 30, 2020 and 2019, respectively, and $61.8 million and $61.9 million for the six months ended June 30, 2020 and 2019, respectively.

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

2020 (remaining)$61.7  
2021123.4  
2022123.4  
2023123.4  
2024123.4  
Thereafter631.8  
Total$1,187.1  
15

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


(4) Related Party Transactions

Transactions with Cedar Cove JV. For the three and six months ended June 30, 2020, we recorded cost of sales of $1.3 million and $4.2 million, respectively, and for the three and six months ended June 30, 2019, we recorded cost of sales of $5.8 million and $13.9 million, respectively, related to our purchase of residue gas and NGLs from the Cedar Cove JV subsequent to processing at its Central Oklahoma processing facilities. Additionally, we had accounts payable balances related to transactions with the Cedar Cove JV of $0.4 million and $1.1 million at June 30, 2020 and December 31, 2019, 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 included in the accompanying consolidated financial statements.

(5) Long-Term Debt

As of June 30, 2020 and December 31, 2019, long-term debt consisted of the following (in millions):

June 30, 2020December 31, 2019
Outstanding PrincipalPremium (Discount)Long-Term DebtOutstanding PrincipalPremium (Discount)Long-Term Debt
Consolidated Credit Facility due 2024 (1)$400.0  $—  $400.0  $350.0  $—  $350.0  
Term Loan due 2021 (2)850.0  —  850.0  850.0  —  850.0  
ENLK’s 4.40% Senior unsecured notes due 2024
521.8  1.2  523.0  550.0  1.5  551.5  
ENLK’s 4.15% Senior unsecured notes due 2025
720.8  (0.6) 720.2  750.0  (0.7) 749.3  
ENLK’s 4.85% Senior unsecured notes due 2026
491.0  (0.4) 490.6  500.0  (0.5) 499.5  
ENLC’s 5.375% Senior unsecured notes due 2029
498.7  —  498.7  500.0  —  500.0  
ENLK’s 5.60% Senior unsecured notes due 2044
350.0  (0.2) 349.8  350.0  (0.2) 349.8  
ENLK’s 5.05% Senior unsecured notes due 2045
450.0  (5.8) 444.2  450.0  (5.9) 444.1  
ENLK’s 5.45% Senior unsecured notes due 2047
500.0  (0.1) 499.9  500.0  (0.1) 499.9  
Debt classified as long-term, including current maturities of long-term debt$4,782.3  $(5.9) 4,776.4  $4,800.0  $(5.9) 4,794.1  
Debt issuance cost (3)(27.4) (29.8) 
Long-term debt, net of unamortized issuance cost$4,749.0  $4,764.3  
____________________________
(1)Bears interest based on Prime and/or LIBOR plus an applicable margin. The effective interest rate was 1.8% and 3.3% at June 30, 2020 and December 31, 2019, respectively.
(2)Bears interest based on Prime and/or LIBOR plus an applicable margin. The effective interest rate was 1.7% and 3.2% at June 30, 2020 and December 31, 2019, respectively.
(3)Net of amortization of $12.6 million and $10.9 million at June 30, 2020 and December 31, 2019, respectively.

Consolidated Credit Facility

The Consolidated Credit Facility 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 ($400.0 million as of June 30, 2020), and 105% of the outstanding letters of credit under the Consolidated Credit Facility ($23.0 million as of June 30, 2020). 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.
16

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

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 (LIBOR) 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 June 30, 2020, we were in compliance with and expect to be in compliance with the financial 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. 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 and the outstanding balance becomes due, 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 June 30, 2020. 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 LIBOR 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 June 30, 2020, we were in compliance with and expect to be in compliance with the financial covenants of the Term Loan for at least the next twelve months.

17

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

Senior Unsecured Notes Repurchases

For the three and six months ended June 30, 2020, we and ENLK made aggregate payments to partially repurchase the 2024, 2025, 2026, and 2029 Notes in open market transactions. Activity related to the partial repurchases of our outstanding debt consisted of the following (in millions):
Three Months Ended
June 30, 2020
Six Months Ended
June 30, 2020
Debt repurchased$57.2  $67.7  
Aggregate payments(30.8) (36.0) 
Net discount on repurchased debt(0.3) (0.3) 
Accrued interest on repurchased debt0.6  0.6  
Gain on extinguishment of debt$26.7  $32.0  

(6) Income Taxes

The components of our income tax benefit (expense) are as follows (in millions):
Three Months Ended
June 30,
Six Months Ended
June 30,
2020201920202019
Current income tax expense$(0.4) $(0.3) $(0.7) $(1.3) 
Deferred income tax benefit (expense)(11.3) 5.7  22.7  4.9  
Income tax benefit (expense)$(11.7) $5.4  $22.0  $3.6  

The following schedule reconciles total income tax benefit (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
June 30,
Six Months Ended
June 30,
2020201920202019
Expected income tax benefit (expense) based on federal statutory rate$(3.7) $4.5  $63.6  $41.2  
State income tax benefit (expense), net of federal benefit(1.0) 0.4  7.0  4.3  
Unit-based compensation (1)(6.8) (0.1) (4.4) —  
Non-deductible expense related to goodwill impairment—  —  (43.4) (43.8) 
Other(0.2) 0.6  (0.8) 1.9  
Income tax benefit (expense)$(11.7) $5.4  $22.0  $3.6  
____________________________
(1)Related to book-to-tax differences recorded upon the vesting of restricted incentive units.

Deferred Tax Assets and Liabilities

Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. The deferred tax assets, net of deferred tax liabilities, are included in “Other assets, net” in the consolidated balance sheets. As of June 30, 2020, we had $58.3 million of deferred tax assets, net of $407.3 million of deferred tax liabilities. As of December 31, 2019, we had $32.2 million of deferred tax assets, net of $354.0 million of deferred tax liabilities.

18

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

(7) Certain Provisions of the ENLK Partnership Agreement

a.Series B Preferred Units

As of June 30, 2020 and December 31, 2019, there were 59,897,920 and 59,599,550 Series B Preferred Units issued and outstanding, respectively.

A summary of the distribution activity relating to the Series B Preferred Units during the six months ended June 30, 2020 and 2019 is provided below:
Declaration periodDistribution paid as additional Series B Preferred UnitsCash Distribution (in millions)Date paid/payable
2020
Fourth Quarter of 2019148,999  $16.8  February 13, 2020
First Quarter of 2020149,371  $16.8  May 13, 2020
Second Quarter of 2020149,745  $16.8  August 13, 2020
2019
Fourth Quarter of 2018425,785  $16.5  February 13, 2019
First Quarter of 2019147,887  $16.7  May 14, 2019
Second Quarter of 2019148,257  $17.1  August 13, 2019

b.Series C Preferred Units

As of June 30, 2020 and December 31, 2019, there were 400,000 Series C Preferred Units issued and outstanding. ENLK distributed $12.0 million to holders of Series C Preferred Units during the three and six months ended June 30, 2020 and 2019, respectively.

c.ENLK Common Unit Distributions

On February 13, 2019, ENLK paid $0.39 per ENLK common unit related to the fourth quarter of 2018.

19

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

(8) Members’ Equity

a.Earnings Per Unit and Dilution Computations

As required under ASC 260, Earnings Per Share, unvested share-based payments that entitle employees to receive non-forfeitable distributions are considered participating securities for earnings per unit calculations. The following table reflects the computation of basic and diluted earnings per unit for the periods presented (in millions, except per unit amounts):
Three Months Ended
June 30,
Six Months Ended
June 30,
2020201920202019
Distributed earnings allocated to:
Common units (1)$45.9  $137.8  $91.7  $247.2  
Unvested restricted units (1)0.8  1.8  1.6  3.0  
Total distributed earnings$46.7  $139.6  $93.3  $250.2  
Undistributed loss allocated to:
Common units$(42.2) $(153.5) $(369.6) $(437.3) 
Unvested restricted units(0.4) (2.2) (6.4) (5.3) 
Total undistributed loss$(42.6) $(155.7) $(376.0) $(442.6) 
Net income (loss) allocated to:
Common units$3.7  $(15.7) $(277.9) $(190.1) 
Unvested restricted units0.4  (0.4) (4.8) (2.3) 
Total net income (loss)$4.1  $(16.1) $(282.7) $(192.4) 
Basic and diluted net income (loss) per unit:
Basic$0.01  $(0.03) $(0.58) $(0.44) 
Diluted$0.01  $(0.03) $(0.58) $(0.44) 
____________________________
(1)For the three months ended June 30, 2020 and 2019, distributed earnings represent a declared distribution of $0.09375 per unit payable on August 13, 2020 and a distribution of $0.283 per unit paid on August 13, 2019, respectively.
(2)For the six months ended June 30, 2020, distributed earnings included a distribution of $0.09375 per unit paid on May 13, 2020 and a declared distribution of $0.09375 per unit payable on August 13, 2020. For the six months ended June 30, 2019, distributed earnings included distributions of $0.279 per unit paid on May 14, 2019 and $0.283 per unit paid on August 13, 2019.

The following are the unit amounts used to compute the basic and diluted earnings per unit for the periods presented (in millions):
Three Months Ended
June 30,
Six Months Ended
June 30,
2020201920202019
Basic weighted average units outstanding:
Weighted average common units outstanding489.3  487.2  489.0  439.9  
Diluted weighted average units outstanding:
Weighted average basic common units outstanding489.3  487.2  489.0  439.9  
Dilutive effect of non-vested restricted units (1)1.1  —  —  —  
Total weighted average diluted common units outstanding490.4  487.2  489.0  439.9  
____________________________
(1)All common unit equivalents were antidilutive for the six months ended June 30, 2020 and for the three and six months ended June 30, 2019 since a net loss existed for those periods.

20

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

b.Distributions

A summary of our distribution activity relating to the ENLC common units for the six months ended June 30, 2020 and 2019, respectively, is provided below:
Declaration periodDistribution/unitDate paid/payable
2020
Fourth Quarter of 2019$0.1875  February 13, 2020
First Quarter of 2020$0.09375  May 13, 2020
Second Quarter of 2020$0.09375  August 13, 2020
2019
Fourth Quarter of 2018$0.275  February 14, 2019
First Quarter of 2019$0.279  May 14, 2019
Second Quarter of 2019$0.283  August 13, 2019

(9) Investment in Unconsolidated Affiliates

As of June 30, 2020, our unconsolidated investments consisted of a 38.75% ownership in GCF and a 30% ownership in the Cedar Cove JV. The following table shows the activity related to our investment in unconsolidated affiliates for the periods indicated (in millions):
Three Months Ended
June 30,
Six Months Ended
June 30,
2020201920202019
GCF
Distributions$—  $7.4  $1.6  $9.6  
Equity in income$0.3  $5.2  $2.1  $10.9  
Cedar Cove JV
Distributions$0.2