Enlink Midstream, Llc (ENLC) 10-Q Quarterly Report Wed Nov 03 2021

	•	Reported net income of $32.3 million, net cash provided by operating activities of $197.0 million, and adjusted EBITDA, net to EnLink, of $256.4 million for the third quarter of 2021, driven by strong producer activity and continued focus on operating efficiencies. Results were ahead of internal forecast, excluding temporary $4 million impact from Hurricane Ida during the quarter.
	•	Taking into account the third quarter results, EnLink expects to report 2021 net income within the guidance range provided in June of $125 to $165 million. EnLink also expects to report 2021 adjusted EBITDA in the upper end of guidance provided in June of $1.02 billion to $1.06 billion.
	•	Grew adjusted EBITDA 3.6% compared to the third quarter of 2020, after excluding the impact of minimum volume commitments (MVC) that expired in 2020.
	•	Continued to focus on operating efficiencies leading to approximately flat operating and general and administrative expenses in the first nine months of 2021 compared to the same period in 2020, net of Project War Horse and Winter Storm Uri impacts. These results were achieved despite the inflationary environment facing the industry.
	•	Experienced improving volume trends across EnLink's Permian, Oklahoma, and North Texas segments as producers continued to take advantage of the improved commodity price environment. Given the natural time lag between drilling a well and bringing volumes online, EnLink's visibility and outlook for the fourth quarter of 2021 and into 2022 continues to strengthen.
	•	Delivered $80.5 million of free cash flow after distributions (FCFAD) for the third quarter of 2021, driven by strong operational results and timing of capex. On a trailing 12-month basis as of September 30, 2021, EnLink has generated nearly $340 million in total FCFAD.
	•	Completed Project War Horse and announcing Project Phantom, the second plant relocation from Central Oklahoma to the Midland Basin, demonstrating continued success in executing our capital-light approach to meeting rising customer activity while maximizing efficiency across our asset footprint. Project Phantom will relocate EnLink's Thunderbird Plant, bringing 200 million cubic feet per day (MMcf/d) of processing capacity to the Midland Basin. The project is expected to be online in the fourth quarter of 2022 and represents cost savings of approximately 50% over illustrative new-build costs.
	•	Exited the third quarter of 2021 with leverage at 4.1x as EnLink continues to de-lever and approach its near-term target of less than 4x.
	•	Paid down $100 million of December 2021 term loan during the third quarter of 2021, leaving a very manageable $150 million to be paid in the fourth quarter.
	•	Repurchased $12.5 million of common units during the third quarter.

The following information was filed by Enlink Midstream, Llc (ENLC) on Tuesday, November 2, 2021 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.

Table of Contents

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, 2021

☐ 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)


Delaware		46-4108528
(State of organization)		(I.R.S. Employer Identification No.)

1722 Routh St., Suite 1300
Dallas,	Texas	75201
(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 Class

Trading Symbol

Name of Exchange on which Registered

Common Units Representing Limited Liability Company Interests

ENLC

The New York Stock Exchange

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 filer

☒

Accelerated filer

☐

Non-accelerated filer

☐

Smaller 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 October 28, 2021, the Registrant had 487,957,616 common units outstanding.

Table of Contents

TABLE OF CONTENTS


Item	Description	Page

	PART I—FINANCIAL INFORMATION

1.	Financial Statements	5

2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	32

3.	Quantitative and Qualitative Disclosures About Market Risk	53

4.	Controls and Procedures	55

	PART II—OTHER INFORMATION

1.	Legal Proceedings	56

1A.	Risk Factors	56

2.	Unregistered Sales of Equity Securities and Use of Proceeds	56



6.	Exhibits	57

Table of Contents

DEFINITIONS

The following terms as defined are used in this document:


Defined Term						Definition
/d						Per day.
2014 Plan						ENLC’s 2014 Long-Term Incentive Plan.
Adjusted gross margin						Revenue less cost of sales, exclusive of operating expenses and depreciation and amortization related to our operating segments. Adjusted gross 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.
AR Facility						An accounts receivable securitization facility of up to $350 million entered into by EnLink Midstream Funding, LLC, a bankruptcy-remote special purpose entity and our indirect subsidiary, with PNC Bank, National Association, as administrative agent and lender, and PNC Capital Markets, LLC, as structuring agent. The AR Facility is scheduled to terminate on September 24, 2024, unless extended or earlier terminated in accordance with its terms.
ASC						The FASB Accounting Standards Codification.



Ascension JV						Ascension 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.
Bbls						Barrels.
Bcf						Billion cubic feet.
Beginning TSR Price						The beginning total shareholder return (“TSR”) price, which is the closing share price of ENLC on the grant date of the performance award agreement or the previous trading day if the grant date was not a trading day, is one of the assumptions used to calculate the grant-date fair value of performance award agreements.
Cedar Cove JV						Cedar 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.
CFTC						U.S. Commodity Futures Trading Commission.
CNOW						Central Northern Oklahoma Woodford Shale.
CO2						Carbon dioxide.
Commission						U.S. Securities and Exchange Commission.
Consolidated Credit Facility						A $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 JV						Delaware 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 processing plant located in the Delaware Basin in Texas.
Devon						Devon Energy Corporation.
ENLC						EnLink Midstream, LLC.
ENLK						EnLink Midstream Partners, LP or, when applicable, EnLink Midstream Partners, LP together with its consolidated subsidiaries. Also referred to as the “Partnership.”
FASB						Financial Accounting Standards Board.
GAAP						Generally accepted accounting principles in the United States of America.
Gal						Gallons.
GCF						Gulf Coast Fractionators, which owns an NGL fractionator in Mont Belvieu, Texas. ENLK owns 38.75% of GCF.
General Partner						EnLink Midstream GP, LLC, the general partner of ENLK.
GIP						Global 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.
ISDAs						International Swaps and Derivatives Association Agreements.
Managing Member						EnLink Midstream Manager, LLC, the managing member of ENLC.
Merger						On 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.
Midland Basin						A large sedimentary basin in West Texas.

Table of Contents


MMbbls						Million barrels.
MMbtu						Million British thermal units.
MMcf						Million cubic feet.
MVC						Minimum volume commitment.
NGL						Natural gas liquid.
NGP						NGP Natural Resources XI, LP.
OPEC+						Organization of the Petroleum Exporting Countries and its broader partners.
Operating Partnership						EnLink Midstream Operating, LP, a Delaware limited partnership and wholly owned subsidiary of ENLK.
ORV						ENLK’s Ohio River Valley crude oil, condensate stabilization, natural gas compression, and brine disposal assets in the Utica and Marcellus shales.
OTC						Over-the-counter.
Permian Basin						A large sedimentary basin that includes the Midland and Delaware Basins.
POL contracts						Percentage-of-liquids contracts.
POP contracts						Percentage-of-proceeds contracts.
Series B Preferred Units						ENLK’s Series B Cumulative Convertible Preferred Units.
Series C Preferred Units						ENLK’s Series C Fixed-to-Floating Rate Cumulative Redeemable Perpetual Preferred Units.
STACK						Sooner Trend Anadarko Basin Canadian and Kingfisher Counties in Oklahoma.
Term Loan						A term loan originally in the amount of $850.0 million 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. The Term Loan matures on December 10, 2021.

Table of Contents

PART I—FINANCIAL INFORMATION

Item 1. Financial Statements

ENLINK MIDSTREAM, LLC AND SUBSIDIARIES

Consolidated Balance Sheets

(In millions, except unit data)


	September 30, 2021		December 31, 2020
	(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents	$	36.1	$	39.6
Accounts receivable:
Trade, net of allowance for bad debt of $0.3 and $0.5, respectively	88.5		80.6
Accrued revenue and other	636.6		447.5

Fair value of derivative assets	75.3		25.0
Other current assets	156.2		58.7
Total current assets	992.7		651.4
Property and equipment, net of accumulated depreciation of $4,215.7 and $3,863.0, respectively	6,425.1		6,652.1
Intangible assets, net of accumulated amortization of $763.2 and $668.8, respectively	1,081.6		1,125.4

Investment in unconsolidated affiliates	29.0		41.6
Fair value of derivative assets	2.2		4.9
Other assets, net	95.9		75.5
Total assets	$	8,626.5	$	8,550.9
LIABILITIES AND MEMBERS’ EQUITY
Current liabilities:
Accounts payable and drafts payable	$	103.5	$	60.5

Accrued gas, NGLs, condensate, and crude oil purchases (1)	529.8		291.5
Fair value of derivative liabilities	110.9		37.1
Current maturities of long-term debt	150.0		349.8
Other current liabilities	215.9		149.1
Total current liabilities	1,110.1		888.0
Long-term debt	4,242.6		4,244.0

Other long-term liabilities	92.1		94.8
Deferred tax liability, net	124.2		108.6
Fair value of derivative liabilities	2.3		2.5

Members’ equity:
Members’ equity (487,951,939 and 489,381,149 units issued and outstanding, respectively)	1,338.8		1,508.8
Accumulated other comprehensive loss	(4.2)		(15.3)
Non-controlling interest	1,720.6		1,719.5
Total members’ equity	3,055.2		3,213.0
Commitments and contingencies (Note 15)
Total liabilities and members’ equity	$	8,626.5	$	8,550.9

____________________________

(1)Includes related party accounts payable balances of $1.9 million and $1.0 million at September 30, 2021 and December 31, 2020, respectively.

See accompanying notes to consolidated financial statements.

Table of Contents

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,
	2021		2020		2021		2020
	(Unaudited)
Revenues:
Product sales	$	1,610.2	$	696.1	$	3,968.7	$	2,121.6

Midstream services	211.0		237.5		629.2		716.2

Loss on derivative activity	(33.6)		(5.1)		(155.2)		(8.3)
Total revenues	1,787.6		928.5		4,442.7		2,829.5
Operating costs and expenses:
Cost of sales, exclusive of operating expenses and depreciation and amortization (1)(2)	1,400.8		549.5		3,390.6		1,702.5
Operating expenses	106.9		94.3		260.0		283.1
Depreciation and amortization	153.0		160.3		455.9		481.3
Impairments	—		—		—		354.5
(Gain) loss on disposition of assets	(0.4)		(1.8)		(0.7)		2.8
General and administrative	28.2		25.7		80.3		79.6


Total operating costs and expenses	1,688.5		828.0		4,186.1		2,903.8
Operating income (loss)	99.1		100.5		256.6		(74.3)
Other income (expense):
Interest expense, net of interest income	(60.1)		(55.5)		(180.1)		(166.3)
Gain on extinguishment of debt	—		—		—		32.0
Income (loss) from unconsolidated affiliates	(2.3)		(0.2)		(9.9)		0.8
Other income	—		0.4		0.1		0.4
Total other expense	(62.4)		(55.3)		(189.9)		(133.1)
Income (loss) before non-controlling interest and income taxes	36.7		45.2		66.7		(207.4)
Income tax benefit (expense)	(4.4)		(6.0)		(12.4)		16.0
Net income (loss)	32.3		39.2		54.3		(191.4)
Net income attributable to non-controlling interest	30.4		26.6		86.7		78.7
Net income (loss) attributable to ENLC	$	1.9	$	12.6	$	(32.4)	$	(270.1)
Net income (loss) attributable to ENLC per unit:
Basic common unit	$	—	$	0.03	$	(0.07)	$	(0.55)
Diluted common unit	$	—	$	0.03	$	(0.07)	$	(0.55)

____________________________

(1)Includes related party cost of sales of $4.9 million and $2.0 million for the three months ended September 30, 2021 and 2020, respectively, and excludes all operating expenses as well as depreciation and amortization related to our operating segments of $150.8 million and $158.6 million for the three months ended September 30, 2021 and 2020, respectively.

(2)Includes related party cost of sales of $11.7 million and $6.2 million for the nine months ended September 30, 2021 and 2020, respectively, and excludes all operating expenses as well as depreciation and amortization related to our operating segments of $449.9 million and $475.5 million for the nine months ended September 30, 2021 and 2020, respectively.

See accompanying notes to consolidated financial statements.

Table of Contents

ENLINK MIDSTREAM, LLC AND SUBSIDIARIES

Consolidated Statements of Comprehensive Income (Loss)

(In millions)


	Three Months Ended September 30,				Nine Months Ended September 30,
	2021		2020		2021		2020
	(Unaudited)
Net income (loss)	$	32.3	$	39.2	$	54.3	$	(191.4)
Unrealized gain (loss) on designated cash flow hedge (1)	3.8		3.6		11.1		(8.0)
Comprehensive income (loss)	36.1		42.8		65.4		(199.4)
Comprehensive income attributable to non-controlling interest	30.4		26.6		86.7		78.7
Comprehensive income (loss) attributable to ENLC	$	5.7	$	16.2	$	(21.3)	$	(278.1)

____________________________

(1)Includes a tax expense of $1.2 million and a tax expense of $1.1 million for the three months ended September 30, 2021 and 2020, respectively, and a tax expense of $3.4 million and a tax benefit of $2.4 million for the nine months ended September 30, 2021 and 2020, respectively.

See accompanying notes to consolidated financial statements.

Table of Contents

ENLINK MIDSTREAM, LLC AND SUBSIDIARIES

Consolidated Statements of Changes in Members’ Equity

(In millions)


	Common Units			Accumulated Other Comprehensive Loss		Non-Controlling Interest		Total		Redeemable Non-controlling interest (Temporary Equity)
	$		Units	$		$		$		$
	(Unaudited)
Balance, December 31, 2020	$	1,508.8	489.4	$	(15.3)	$	1,719.5	$	3,213.0	$	—
Conversion of restricted units for common units, net of units withheld for taxes	(1.2)		0.7	—		—		(1.2)		—
Unit-based compensation	6.5		—	—		—		6.5		—
Contributions from non-controlling interests	—		—	—		0.9		0.9		—
Distributions	(47.1)		—	—		(25.8)		(72.9)		(0.2)
Unrealized gain on designated cash flow hedge (1)	—		—	3.6		—		3.6		—
Fair value adjustment related to redeemable non-controlling interest	(0.1)		—	—		—		(0.1)		0.2
Net income (loss)	(12.7)		—	—		25.3		12.6		—
Balance, March 31, 2021	1,454.2		490.1	(11.7)		1,719.9		3,162.4		—
Conversion of restricted units for common units, net of units withheld for taxes	(0.2)		0.1	—		—		(0.2)		—
Unit-based compensation	6.4		—	—		—		6.4		—
Contributions from non-controlling interests	—		—	—		1.0		1.0		—
Distributions	(46.7)		—	—		(36.0)		(82.7)		—
Unrealized gain on designated cash flow hedge (2)	—		—	3.7		—		3.7		—
Common units repurchased	(2.0)		(0.3)	—		—		(2.0)		—
Net income (loss)	(21.6)		—	—		31.0		9.4		—
Balance, June 30, 2021	1,390.1		489.9	(8.0)		1,715.9		3,098.0		—
Conversion of restricted units for common units, net of units withheld for taxes	(0.5)		0.2	—		—		(0.5)		—
Unit-based compensation	6.4		—	—		—		6.4		—
Contributions from non-controlling interests	—		—	—		0.5		0.5		—
Distributions	(46.6)		—	—		(26.2)		(72.8)		—
Unrealized gain on designated cash flow hedge (3)	—		—	3.8		—		3.8		—
Common units repurchased	(12.5)		(2.1)	—		—		(12.5)		—
Net income	1.9		—	—		30.4		32.3		—
Balance, September 30, 2021	$	1,338.8	488.0	$	(4.2)	$	1,720.6	$	3,055.2	$	—

____________________________

(1)Includes a tax expense of $1.1 million.

(2)Includes a tax expense of $1.1 million.

(3)Includes a tax expense of $1.2 million.

See accompanying notes to consolidated financial statements.

Table of Contents

ENLINK MIDSTREAM, LLC AND SUBSIDIARIES

Consolidated Statements of Changes in Members’ Equity (Continued)

(In millions)


	Common Units			Accumulated Other Comprehensive Loss		Non-Controlling Interest		Total		Redeemable 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 compensation	12.3		—	—		—		12.3		—
Contributions from non-controlling interests	—		—	—		37.1		37.1		—
Distributions	(93.3)		—	—		(24.4)		(117.7)		(0.3)
Unrealized loss on designated cash flow hedge (1)	—		—	(13.1)		—		(13.1)		—
Fair value adjustment related to redeemable non-controlling interest	0.7		—	—		—		0.7		(0.9)
Redemption of non-controlling interest	—		—	—		—		—		(4.0)
Net income (loss)	(286.8)		—	—		26.4		(260.4)		—
Balance, March 31, 2020	1,764.4		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 compensation	6.8		—	—		—		6.8		—
Contributions from non-controlling interests	—		—	—		13.2		13.2		—
Distributions	(46.5)		—	—		(35.9)		(82.4)		—
Unrealized gain on designated cash flow hedge (2)	—		—	1.5		—		1.5		—
Net income	4.1		—	—		25.7		29.8		—
Balance, June 30, 2020	1,728.5		489.5	(22.6)		1,723.7		3,429.6		—
Conversion of restricted units for common units, net of units withheld for taxes	(0.4)		0.2	—		—		(0.4)		—
Unit-based compensation	7.2		—	—		—		7.2		—
Contributions from non-controlling interests	—		—	—		1.9		1.9		—
Distributions	(46.4)		—	—		(23.3)		(69.7)		(0.3)
Unrealized gain on designated cash flow hedge (3)	—		—	3.6		—		3.6		—
Fair value adjustment related to redeemable non-controlling interest	(0.3)		—	—		—		(0.3)		0.3
Net income	12.6		—	—		26.6		39.2		—
Balance, September 30, 2020	$	1,701.2	489.7	$	(19.0)	$	1,728.9	$	3,411.1	$	—

____________________________

(1)Includes a tax benefit of $4.0 million.

(2)Includes a tax expense of $0.5 million.

(3)Includes a tax expense of $1.1 million.

See accompanying notes to consolidated financial statements.

Table of Contents

ENLINK MIDSTREAM, LLC AND SUBSIDIARIES

Consolidated Statements of Cash Flows

(In millions)


	Nine Months Ended September 30,
	2021		2020
	(Unaudited)
Cash flows from operating activities:
Net income (loss)	$	54.3	$	(191.4)
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Impairments	—		354.5
Depreciation and amortization	455.9		481.3
Utility credits, net of usage	(38.2)		—
Deferred income tax (benefit) expense	12.2		(17.1)

Non-cash unit-based compensation	19.3		24.6
Amortization of designated cash flow hedge	9.6		0.1
Payments to terminate interest rate swaps	(1.8)		—
Non-cash loss on derivatives recognized in net income (loss)	37.5		7.3
Gain on extinguishment of debt	—		(32.0)
Amortization of debt issuance costs and net discount of senior unsecured notes	3.9		3.1



Other operating activities	6.8		2.8
Changes in assets and liabilities:
Accounts receivable, accrued revenue, and other	(196.5)		85.3
Natural gas and NGLs inventory, prepaid expenses, and other	(80.3)		(12.7)
Accounts payable, accrued product purchases, and other accrued liabilities	316.5		(144.8)
Net cash provided by operating activities	599.2		561.0
Cash flows from investing activities:
Additions to property and equipment	(104.7)		(254.4)


Acquisitions, net of cash acquired	(56.7)		—

Other investing activities	6.0		3.7
Net cash used in investing activities	(155.4)		(250.7)
Cash flows from financing activities:
Proceeds from borrowings	829.5		690.0
Repayments on borrowings	(1,034.5)		(776.0)


Distribution to members	(140.4)		(186.2)
Distributions to non-controlling interests	(88.2)		(84.2)
Contributions by non-controlling interests	2.4		52.2
Common unit repurchases	(14.5)		—
Other financing activities	(1.6)		(4.6)
Net cash used in financing activities	(447.3)		(308.8)
Net increase (decrease) in cash and cash equivalents	(3.5)		1.5
Cash and cash equivalents, beginning of period	39.6		77.4
Cash and cash equivalents, end of period	$	36.1	$	78.9

Supplemental disclosures of cash flow information:
Cash paid for interest	$	130.1	$	125.7
Cash paid (refunded) for income taxes	$	0.2	$	(0.1)
Non-cash investing activities:
Non-cash accrual of property and equipment	$	5.1	$	(27.2)
Non-cash acquisitions	$	16.9	$	—
Right-of-use assets obtained in exchange for operating lease liabilities	$	10.7	$	9.1
Non-cash financing activities:
Redemption of non-controlling interest	$	—	$	(4.0)

See accompanying notes to consolidated financial statements.

Table of Contents

ENLINK MIDSTREAM, LLC AND SUBSIDIARIES

Notes to Consolidated Financial Statements

September 30, 2021

(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.

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 ENLK’s common units and also owns all of the membership interests of the 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 midstream energy asset network includes approximately 12,000 miles of pipelines, 23 natural gas processing plants with approximately 5.5 Bcf/d of processing capacity, seven fractionators with approximately 290,000 Bbls/d of fractionation capacity, barge and rail terminals, product storage facilities, purchasing and marketing capabilities, brine disposal wells, a crude oil trucking fleet, and equity investments in certain joint ventures. Our operations are based in the United States, and our sales are derived primarily from domestic customers.

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.

Table of Contents

ENLINK MIDSTREAM, LLC AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

(Unaudited)

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.

c.COVID-19 Update

On March 11, 2020, the World Health Organization declared the ongoing coronavirus (COVID-19) outbreak a pandemic and recommended containment and mitigation measures worldwide. There remains considerable uncertainty regarding how long the COVID-19 pandemic (including variants of the virus) will persist and affect economic conditions and the extent and duration of changes in consumer behavior.

(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, 2020. 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

The following table summarizes the contractually committed fees (in millions) 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. We record revenue under MVC and firm transportation contracts during periods of shortfall when it is known that the customer cannot, or will not, make up the deficiency. These fees do not represent the shortfall amounts we expect to collect under our MVC and firm transportation contracts, as we generally do not expect volume shortfalls to equal the full amount of the contractual MVCs and firm transportation contracts during these periods.


Contractually Committed Fees	Commitments (1)
2021 (remaining)	$	38.9
2022	136.3
2023	123.5
2024	107.6
2025	63.7
Thereafter	347.3
Total	$	817.3

____________________________

(1)Amounts do not represent expected shortfall under these commitments.

Table of Contents

ENLINK MIDSTREAM, LLC AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

(Unaudited)

c.Acquisition of Business

On April 30, 2021, we completed the acquisition of Amarillo Rattler, LLC, the owner of a gathering and processing system located in the Midland Basin. In connection with the purchase, we entered into an amended and restated gas gathering and processing agreement with Diamondback Energy, strengthening our dedicated acreage position with Diamondback Energy. We acquired the system with an upfront payment of $50.0 million, which was paid with cash-on-hand, with an additional $10 million to be paid on April 30, 2022, and contingent consideration capped at $15 million and payable between 2024 and 2026 based on Diamondback Energy’s drilling activity above historical levels.

Under the acquisition method of accounting, the acquired assets of Amarillo Rattler, LLC have been recorded at their respective fair values as of the date of the acquisition. Determining the fair value of the assets of Amarillo Ratter, LLC requires judgment and certain assumptions to be made, particularly related to the valuation of acquired customer relationships. The inputs and assumptions related to the customer relationships are categorized as level 3 in the fair value hierarchy. On a historical pro forma basis, our consolidated revenues, net income (loss), total assets, and earnings per unit amounts would not have differed materially had the acquisition been completed on January 1, 2021 rather than April 30, 2021. The following table presents the fair value of the identified assets received and liabilities assumed at the acquisition date (in millions):


Consideration
Cash (including working capital payment)	$	50.6
Installment payable	10.0
Contingent consideration fair value (1)	6.9
Total consideration:	$	67.5

Purchase price allocation
Assets acquired:
Current assets (including $1.3 million in cash)	$	1.4
Property and equipment	16.3
Intangible assets	50.6
Other assets, net (2)	0.6
Liabilities assumed:
Current liabilities	(0.8)
Other long-term liabilities (2)	(0.6)
Net assets acquired	$	67.5

____________________________

(1)The estimated fair value of the Amarillo Rattler, LLC contingent consideration was calculated in accordance with the fair value guidance contained in ASC 820, Fair Value Measurements. There are a number of assumptions and estimates factored into these fair values and actual contingent consideration payments could differ from the estimated fair values.

(2)“Other assets, net” and “Other long-term liabilities” consist of the right-of-use asset and lease liability, respectively, recorded from a lease obtained through the acquisition of Amarillo Rattler, LLC.

(3) 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 ranged from 10 to 20 years at the time the intangible assets were originally recorded.

Table of Contents

ENLINK MIDSTREAM, LLC AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

(Unaudited)

The following table represents our change in carrying value of intangible assets (in millions):


	Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount
Nine Months Ended September 30, 2021
Customer relationships, beginning of period	$	1,794.2	$	(668.8)	$	1,125.4
Customer relationships obtained from acquisition of business	50.6		—		50.6
Amortization expense	—		(94.4)		(94.4)

Customer relationships, end of period	$	1,844.8	$	(763.2)	$	1,081.6

The weighted average amortization period for intangible assets is 14.9 years. Amortization expense was $31.9 million and $30.9 million for the three months ended September 30, 2021 and 2020, respectively, and $94.4 million and $92.7 million for the nine months ended September 30, 2021 and 2020, respectively.

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


2021 (remaining)	$	31.9
2022	127.6
2023	127.6
2024	127.6
2025	110.3
Thereafter	556.6

Total	$	1,081.6

(4) Related Party Transactions

Transactions with Cedar Cove JV. For the three and nine months ended September 30, 2021, we recorded cost of sales of $4.9 million and $11.7 million, respectively, and for the three and nine months ended September 30, 2020, we recorded cost of sales of $2.0 million and $6.2 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. Additionally, we had accounts payable balances related to transactions with the Cedar Cove JV of $1.9 million and $1.0 million at September 30, 2021 and December 31, 2020, respectively.

Transactions with GIP. For the nine months ended September 30, 2021, we recorded general and administrative expenses of $0.2 million related to personnel secondment services provided by GIP. We did not record any expenses related to transactions with GIP for the three months ended September 30, 2021. For each of the three and nine months ended September 30, 2020, we recorded general and administrative expenses of $0.2 million related to personnel secondment services provided by GIP.

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.

Table of Contents

ENLINK MIDSTREAM, LLC AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

(Unaudited)

(5) Long-Term Debt

As of September 30, 2021 and December 31, 2020, long-term debt consisted of the following (in millions):


	September 30, 2021						December 31, 2020
	Outstanding Principal		Premium (Discount)		Long-Term Debt		Outstanding Principal		Premium (Discount)		Long-Term Debt
Term Loan due 2021 (1)	$	150.0	$	—	$	150.0	$	350.0	$	—	$	350.0
Consolidated Credit Facility due 2024	—		—		—		—		—		—
AR Facility due 2024 (2)	245.0		—		245.0		250.0		—		250.0
ENLK’s 4.40% Senior unsecured notes due 2024	521.8		0.8		522.6		521.8		1.1		522.9
ENLK’s 4.15% Senior unsecured notes due 2025	720.8		(0.4)		720.4		720.8		(0.6)		720.2
ENLK’s 4.85% Senior unsecured notes due 2026	491.0		(0.3)		490.7		491.0		(0.4)		490.6
ENLC’s 5.625% Senior unsecured notes due 2028	500.0		—		500.0		500.0		—		500.0
ENLC’s 5.375% Senior unsecured notes due 2029	498.7		—		498.7		498.7		—		498.7
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		(5.6)		444.4		450.0		(5.7)		444.3
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	$	4,427.3	$	(5.8)	4,421.5		$	4,632.3	$	(5.9)	4,626.4
Debt issuance costs (3)					(28.9)						(32.6)
Less: Current maturities of long-term debt (1)					(150.0)						(349.8)
Long-term debt, net of unamortized issuance cost					$	4,242.6					$	4,244.0

____________________________

(1)Bears interest based on Prime and/or LIBOR plus an applicable margin. The effective interest rate was 1.6% and 1.7% at September 30, 2021 and December 31, 2020, respectively. The Term Loan will mature on December 10, 2021. Therefore, the outstanding principal balance, net of debt issuance costs, is classified as “Current maturities of long-term debt” on the consolidated balance sheet as of September 30, 2021 and December 31, 2020, respectively.

(2)Bears interest based on LMIR and/or LIBOR plus an applicable margin. The effective interest rate was 1.2% and 2.0% at September 30, 2021 and December 31, 2020, respectively.

(3)Net of amortization of $17.5 million and $14.1 million at September 30, 2021 and December 31, 2020, respectively.

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. In May 2021 and September 2021, we repaid $100.0 million and $100.0 million, respectively, of the borrowings under the Term Loan due December 2021. The outstanding balance of the Term Loan was $150.0 million as of September 30, 2021. The obligations under the Term Loan are unsecured.

Under the terms of the Term Loan, if we consummate one or more acquisitions in which the aggregate purchase price is $50.0 million or more, we 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. In April 2021, we completed the acquisition of Amarillo Rattler, LLC with an aggregate purchase price in excess of $50.0 million and elected to increase the maximum allowed ratio of consolidated indebtedness to consolidated EBITDA to 5.5 to 1.0 through its maturity date. At September 30, 2021, we were in compliance with and expect to be in compliance with the financial covenants of the Term Loan until the Term Loan matures on December 10, 2021.

Table of Contents

ENLINK MIDSTREAM, LLC AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

(Unaudited)

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’s obligations under the Consolidated Credit Facility are accelerated due to a default, ENLK will be liable for the entire outstanding balance and 105% of the outstanding letters of credit under the Consolidated Credit Facility. There were no outstanding borrowings under the Consolidated Credit Facility and $41.1 million outstanding letters of credit as of September 30, 2021.

Under the terms of the Consolidated Credit Facility, if we consummate one or more acquisitions in which the aggregate purchase price is $50.0 million or more, we 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. In April 2021, we completed the acquisition of Amarillo Rattler, LLC with an aggregate purchase price in excess of $50.0 million and elected to increase the maximum allowed ratio of consolidated indebtedness to consolidated EBITDA to 5.5 to 1.0 through the first quarter of 2022. At September 30, 2021, 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.

AR Facility

On October 21, 2020, EnLink Midstream Funding, LLC, a bankruptcy-remote special purpose entity that is an indirect subsidiary of ENLC (the “SPV”) entered into the AR Facility to borrow up to $250.0 million. In connection with the AR Facility, certain subsidiaries of ENLC sold and contributed, and will continue to sell or contribute, their accounts receivable to the SPV to be held as collateral for borrowings under the AR Facility. The SPV’s assets are not available to satisfy the obligations of ENLC or any of its affiliates.

On February 26, 2021, the SPV entered into the first amendment to the AR Facility that, among other things: (i) increased the AR Facility limit and lender commitments by $50.0 million to $300.0 million, (ii) reduced the Adjusted LIBOR and LMIR (each as defined in the AR Facility) minimum floor to zero, rather than the previous 0.375%, and (iii) reduced the effective drawn fee to 1.25% rather than the previous 1.625%.

On September 24, 2021, the SPV entered into the second amendment to the AR Facility that, among other things: (i) increased the AR Facility and lender commitments by $50.0 million to $350.0 million, (ii) extended the scheduled termination date of the facility from October 20, 2023 to September 24, 2024, and (iii) reduced the effective drawn fee to 1.10% rather than the previous 1.25%.

Since our investment in the SPV is not sufficient to finance its activities without additional support from us, the SPV is a variable interest entity. We are the primary beneficiary of the SPV because we have the power to direct the activities that most significantly affect its economic performance and we are obligated to absorb its losses or receive its benefits from operations. Since we are the primary beneficiary of the SPV, we consolidate its assets and liabilities, which consist primarily of billed and unbilled accounts receivable of $708.1 million and long-term debt of $245.0 million as of September 30, 2021.

The amount available for borrowings at any one time under the AR Facility is limited to a borrowing base amount calculated based on the outstanding balance of eligible receivables held as collateral, subject to certain reserves, concentration limits, and other limitations. As of September 30, 2021, the AR Facility had a borrowing base of $350.0 million. Borrowings under the AR Facility bear interest (based on LIBOR or LMIR (as defined in the AR Facility)) plus a drawn fee in the amount of 1.10% at September 30, 2021. The SPV also pays a fee on the undrawn committed amount of the AR Facility. Interest and fees payable by the SPV under the AR Facility are due monthly.

The AR Facility is scheduled to terminate on September 24, 2024, unless extended or earlier terminated in accordance with its terms, at which time no further advances will be available and the obligations under the AR Facility must be repaid in full by no later than (i) the date that is ninety (90) days following such date or (ii) such earlier date on which the loans under the AR Facility become due and payable.

The AR Facility includes covenants, indemnification provisions, and events of default, including those providing for termination of the AR Facility and the acceleration of amounts owed by the SPV under the AR Facility if, among other things, a borrowing base deficiency exists, there is an event of default under the Consolidated Credit Facility, the Term Loan or certain other indebtedness, certain events negatively affecting the overall credit quality of the receivables held as collateral occur, a

Table of Contents

ENLINK MIDSTREAM, LLC AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

(Unaudited)

change of control occurs, or if the consolidated leverage ratio of ENLC exceeds limits identical to those in the Consolidated Credit Facility and the Term Loan.

At September 30, 2021, we were in compliance with and expect to be in compliance with the financial covenants of the AR Facility for at least the next twelve months.

(6) Income Taxes

The components of our income tax benefit (expense) are as follows (in millions):


	Three Months Ended September 30,				Nine Months Ended September 30,
	2021		2020		2021		2020
Current income tax expense	$	(0.1)	$	(0.4)	$	(0.2)	$	(1.1)
Deferred income tax benefit (expense)	(4.3)		(5.6)		(12.2)		17.1
Income tax benefit (expense)	$	(4.4)	$	(6.0)	$	(12.4)	$	16.0

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 September 30,				Nine Months Ended September 30,
	2021		2020		2021		2020
Expected income tax benefit (expense) based on federal statutory rate	$	(2.0)	$	(3.6)	$	4.2	$	60.0
State income tax benefit (expense), net of federal benefit	(0.3)		(0.6)		0.5		6.4
Unit-based compensation (1)	(0.2)		(1.6)		(3.1)		(6.0)
Non-deductible expense related to goodwill impairment	—		—		—		(43.4)
Change in valuation allowance	(1.6)		—		(3.8)		—
Oklahoma statutory rate change (2)	—		—		(7.6)		—
Other	(0.3)		(0.2)		(2.6)		(1.0)
Income tax benefit (expense)	$	(4.4)	$	(6.0)	$	(12.4)	$	16.0

____________________________

(1)Related to book-to-tax differences recorded upon the vesting of restricted incentive units.

(2)Oklahoma House Bill 2960 resulted in a change in the corporate income tax rate from 6% to 4%, effective January 1, 2022. Accordingly, we recorded deferred tax expense in the amount of $7.6 million for the nine months ended September 30, 2021 due to a remeasurement of deferred tax assets.

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 liabilities, net of deferred tax assets, are included in “Deferred tax liability, net” in the consolidated balance sheets. As of September 30, 2021, we had $124.2 million of deferred tax liabilities, net of $484.1 million of deferred tax assets, which included a $157.1 million valuation allowance. As of December 31, 2020, we had $108.6 million of deferred tax liabilities, net of $396.0 million of deferred tax assets, which included a $153.3 million valuation allowance.

A valuation allowance is established to reduce deferred tax assets if all, or some portion, of such assets will more than likely not be realized. We established a valuation allowance of $153.3 million as of December 31, 2020, primarily related to federal and state tax operating loss carryforwards for which we do not believe a tax benefit is more likely than not to be realized. For the three and nine months ended September 30, 2021, we recorded a $1.6 million and $3.8 million valuation allowance adjustment, respectively. As of September 30, 2021, management believes it is more likely than not that the Company will realize the benefits of the deferred tax assets, net of valuation allowance.

Table of Contents

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 September 30, 2021 and December 31, 2020, there were 60,650,397 and 60,197,784 Series B Preferred Units issued and outstanding, respectively.

On August 4, 2021, Enfield Holdings, L.P. (“Enfield”) sold all of its Series B Preferred Units and Class C Common Units representing limited liability company interests in ENLC to Brookfield Infrastructure Partners and funds managed by Oaktree Capital Management, L.P. As a result of this sale, the right of holders of Series B Preferred Units and Class C Common Units to designate a representative to the board of directors of the Managing Member was terminated.

A summary of the distribution activity relating to the Series B Preferred Units during the nine months ended September 30, 2021 and 2020 is provided below:


Declaration period	Distribution paid as additional Series B Preferred Units	Cash Distribution (in millions)		Date paid/payable
2021
Fourth Quarter of 2020	150,494	$	16.9	February 12, 2021
First Quarter of 2021	150,871	$	17.0	May 14, 2021
Second Quarter of 2021	151,248	$	17.0	August 13, 2021
Third Quarter of 2021	151,626	$	17.1	November 12, 2021

2020
Fourth Quarter of 2019	148,999	$	16.8	February 13, 2020
First Quarter of 2020	149,371	$	16.8	May 13, 2020
Second Quarter of 2020	149,745	$	16.8	August 13, 2020
Third Quarter of 2020	150,119	$	16.9	November 13, 2020

b.Series C Preferred Units

As of September 30, 2021 and December 31, 2020, there were 400,000 Series C Preferred Units issued and outstanding, respectively. ENLK distributed $12.0 million to holders of Series C Preferred Units during the nine months ended September 30, 2021 and 2020, respectively.

(8) Members’ Equity

a.Common Unit Repurchase Program

In November 2020, the board of directors of the Managing Member authorized a common unit repurchase program for the repurchase of up to $100.0 million of outstanding ENLC common units and reauthorized such program in April 2021. The repurchases will be made, in accordance with applicable securities laws, from time to time in open market or private transactions and may be made pursuant to a trading plan meeting the requirements of Rule 10b5-1 under the Securities Exchange Act of 1934, as amended (the “Exchange Act”). The repurchases will depend on market conditions and may be discontinued at any time.

For the three months ended September 30, 2021, ENLC repurchased 2,076,545 outstanding ENLC common units for an aggregate cost, including commissions, of $12.5 million, or an average of $6.02 per common unit. For the nine months ended September 30, 2021, ENLC repurchased 2,394,296 outstanding ENLC common units for an aggregate cost, including commissions, of $14.5 million, or an average of $6.05 per common unit.

Table of Contents

ENLINK MIDSTREAM, LLC AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

(Unaudited)

b.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 September 30,				Nine Months Ended September 30,
	2021		2020		2021		2020
Distributed earnings allocated to:
Common units (1)	$	45.8	$	45.9	$	137.7	$	137.6
Unvested restricted units (1)	1.0		0.7		3.2		2.3
Total distributed earnings	$	46.8	$	46.6	$	140.9	$	139.9
Undistributed loss allocated to:
Common units	$	(43.9)	$	(33.4)	$	(169.3)	$	(403.0)
Unvested restricted units	(1.0)		(0.6)		(4.0)		(7.0)
Total undistributed loss	$	(44.9)	$	(34.0)	$	(173.3)	$	(410.0)
Net income (loss) attributable to ENLC allocated to:
Common units	$	1.9	$	12.5	$	(31.6)	$	(265.4)
Unvested restricted units	—		0.1		(0.8)		(4.7)
Total net income (loss) attributable to ENLC	$	1.9	$	12.6	$	(32.4)	$	(270.1)
Basic and diluted total net income (loss) attributable to ENLC per unit:
Basic	$	—	$	0.03	$	(0.07)	$	(0.55)
Diluted	$	—	$	0.03	$	(0.07)	$	(0.55)

____________________________

(1)Represents distribution activity consistent with the distribution activity described in “Distributions” below.

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 September 30,		Nine Months Ended September 30,
	2021	2020	2021	2020
Basic weighted average units outstanding:
Weighted average common units outstanding	488.6	489.7	489.6	489.2

Diluted weighted average units outstanding:
Weighted average basic common units outstanding	488.6	489.7	489.6	489.2
Dilutive effect of non-vested restricted units (1)	6.2	1.2	—	—

Total weighted average diluted common units outstanding	494.8	490.9	489.6	489.2

____________________________

(1)All common unit equivalents were antidilutive for the nine months ended September 30, 2021 and 2020, respectively, since a net loss existed for those periods.

All outstanding units were included in the computation of diluted earnings per unit and weighted based on the number of days such units were outstanding during the period presented.

Table of Contents

ENLINK MIDSTREAM, LLC AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

(Unaudited)

c.Distributions

A summary of our distribution activity related to the ENLC common units for the nine months ended September 30, 2021 and 2020, respectively, is provided below:


Declaration period	Distribution/unit		Date paid/payable
2021
Fourth Quarter of 2020	$	0.09375	February 12, 2021
First Quarter of 2021	$	0.09375	May 14, 2021
Second Quarter of 2021	$	0.09375	August 13, 2021
Third Quarter of 2021	$	0.09375	November 12, 2021

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
Third Quarter of 2020	$	0.09375	November 13, 2020

(9) Investment in Unconsolidated Affiliates

As of September 30, 2021, 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 September 30,				Nine Months Ended September 30,
	2021		2020		2021		2020
GCF

Distributions	$	—	$	—	$	3.5	$	1.6
Equity in income (loss)	$	(1.7)	$	0.4	$	(8.1)	$	2.5

Cedar Cove JV

Distributions	$	0.1	$	—	$	0.3	$	0.4
Equity in loss	$	(0.6)	$	(0.6)	$	(1.8)	$	(1.7)

Total

Distributions	$	0.1	$	—	$	3.8	$	2.0
Equity in income (loss)	$	(2.3)	$	(0.2)	$	(9.9)	$	0.8

The following table shows the balances related to our investment in unconsolidated affiliates as of September 30, 2021 and December 31, 2020 (in millions):


	September 30, 2021		December 31, 2020
GCF	$	29.0	$	40.6
Cedar Cove JV (1)	(1.1)		1.0
Total investment in unconsolidated affiliates	$	27.9	$	41.6

____________________________

(1)As of September 30, 2021, our investment in the Cedar Cove JV is classified as “Other long-term liabilities” on the consolidated balance sheet.

Table of Contents

ENLINK MIDSTREAM, LLC AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

(Unaudited)

(10) Employee Incentive Plans

a.Long-Term Incentive Plans

We account for unit-based compensation in accordance with ASC 718, Compensation—Stock Compensation, which requires that compensation related to all unit-based awards be recognized in the consolidated financial statements. Unit-based compensation cost is valued at fair value at the date of grant, and that grant date fair value is recognized as expense over each award’s requisite service period with a corresponding increase to equity or liability based on the terms of each award and the appropriate accounting treatment under ASC 718. Unit-based compensation associated with ENLC’s unit-based compensation plan awarded to directors, officers, and employees of the General Partner is recorded by ENLK since ENLC has no substantial or managed operating activities other than its interests in ENLK.

Amounts recognized on the consolidated financial statements with respect to these plans are as follows (in millions):


	Three Months Ended September 30,				Nine Months Ended September 30,
	2021		2020		2021		2020
Cost of unit-based compensation charged to operating expense	$	1.5	$	2.0	$	4.9	$	6.2
Cost of unit-based compensation charged to general and administrative expense	4.9		6.4		14.4		18.4
Total unit-based compensation expense	$	6.4	$	8.4	$	19.3	$	24.6
Amount of related income tax benefit recognized in net income (loss) (1)	$	1.5	$	2.0	$	4.5	$	5.8

____________________________

(1)For the three and nine months ended September 30, 2021, the amount of related income tax benefit recognized in net income excluded $0.2 million and $3.1 million of income tax expense, respectively, related to book-to-tax differences recorded upon the vesting of restricted units. For the three and nine months ended September 30, 2020, the amount of related income tax benefit recognized in net income (loss) excluded $1.6 million and $6.0 million of income tax expense, respectively, related to book-to-tax differences recorded upon the vesting of restricted units.

b.ENLC Restricted Incentive Units

ENLC restricted incentive units were valued at their fair value at the date of grant, which is equal to the market value of ENLC common units on such date. A summary of the restricted incentive unit activity for the nine months ended September 30, 2021 is provided below:


	Nine Months Ended September 30, 2021
ENLC Restricted Incentive Units:	Number of Units		Weighted Average Grant-Date Fair Value
Non-vested, beginning of period	5,350,086		$	8.45
Granted (1)	3,926,541		3.85
Vested (1)(2)	(1,234,251)		13.01
Forfeited	(478,554)		6.11
Non-vested, end of period	7,563,822		$	5.47
Aggregate intrinsic value, end of period (in millions)	$	51.6

____________________________

(1)Restricted incentive units typically vest at the end of three years.

(2)Vested units included 369,817 units withheld for payroll taxes paid on behalf of employees.

Table of Contents

ENLINK MIDSTREAM, LLC AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

(Unaudited)

A summary of the restricted incentive units’ aggregate intrinsic value (market value at vesting date) and fair value of units vested (market value at date of grant) for the three and nine months ended September 30, 2021 and 2020 is provided below (in millions):


	Three Months Ended September 30,				Nine Months Ended September 30,
ENLC Restricted Incentive Units:	2021		2020		2021		2020
Aggregate intrinsic value of units vested	$	1.5	$	1.0	$	5.4	$	11.9
Fair value of units vested	$	3.6	$	6.0	$	16.1	$	31.0

As of September 30, 2021, there were $17.7 million of unrecognized compensation costs that related to non-vested ENLC restricted incentive units. These costs are expected to be recognized over a weighted-average period of 1.6 years.

c.ENLC Performance Units

ENLC grants performance awards under the 2014 Plan. The performance award agreements provide that the vesting of performance units (i.e., performance-based restricted incentive units) granted thereunder is dependent on the achievement of certain performance goals over the applicable performance period. At the end of the vesting period, recipients receive distribution equivalents, if any, with respect to the number of performance units vested. The vesting of such units ranges from zero to 200% of the units granted depending on the extent to which the related performance goals are achieved over the relevant performance period.

The following table presents a summary of the performance units:


	Nine Months Ended September 30, 2021
ENLC Performance Units:	Number of Units		Weighted Average Grant-Date Fair Value
Non-vested, beginning of period	2,351,241		$	8.82
Granted	1,388,139		4.70
Vested (1)	(164,553)		26.73

Non-vested, end of period	3,574,827		$	6.40
Aggregate intrinsic value, end of period (in millions)	$	24.4

____________________________

(1)Vested units included 63,901 units withheld for payroll taxes paid on behalf of employees.

A summary of the performance units’ aggregate intrinsic value (market value at vesting date) and fair value of units vested (market value at date of grant) for the nine months ended September 30, 2021 and 2020 is provided below (in millions). No performance units vested for the three months ended September 30, 2021 and 2020.


	Nine Months Ended September 30,
ENLC Performance Units:		2021		2020
Aggregate intrinsic value of units vested		$	0.6	$	0.9
Fair value of units vested		$	4.4	$	5.5

As of September 30, 2021, there were $9.7 million of unrecognized compensation costs that related to non-vested ENLC performance units. These costs are expected to be recognized over a weighted-average period of 1.7 years.

Table of Contents

ENLINK MIDSTREAM, LLC AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

(Unaudited)

The following table presents a summary of the grant-date fair value assumptions by performance unit grant date:


ENLC Performance Units:	January 2021			July 2020			March 2020			January 2020
Grant-date fair value	$	4.70		$	2.33		$	1.13		$	7.69
Beginning TSR price	$	3.71		$	2.52		$	1.25		$	6.13
Risk-free interest rate	0.17		%	0.17		%	0.42		%	1.62		%
Volatility factor	71.00		%	67.00		%	51.00		%	37.00		%

(11) Derivatives

Interest Rate Swaps

In April 2019, we entered into $850.0 million of interest rate swaps to manage the interest rate risk associated with our floating-rate, LIBOR-based borrowings. Under this arrangement, we pay a fixed interest rate of 2.28% in exchange for LIBOR-based variable interest through December 2021. There was no ineffectiveness related to this hedge.

In connection with the partial repayments of the Term Loan in September 2021, May 2021, and December 2020, we paid $0.5 million to terminate $100.0 million of the interest rate swaps, $1.3 million to terminate $100.0 million of the interest rate swaps, and $10.9 million to terminate $500.0 million of the interest rate swaps, respectively, for an aggregate termination of $700.0 million of the $850.0 million interest rate swaps and an aggregate settlement of $12.7 million of the outstanding derivative liability. The unrealized loss remains in accumulated other comprehensive income (loss) and will amortize into “Interest expense” on the consolidated statements of operations until the original maturity date of the Term Loan. For the three and nine months ended September 30, 2021, we amortized $3.5 million and $9.5 million, respectively, into interest expense out of accumulated other comprehensive income (loss) related to the partial terminations of the interest rate swaps. The remaining $150.0 million interest rate swaps were re-designated as a cash flow hedge on LIBOR-based borrowings and continue to be effective.

The components of the unrealized gain (loss) on designated cash flow hedge related to changes in the fair value of our interest rate swaps were as follows (in millions):


	Three Months Ended September 30,				Nine Months Ended September 30,
	2021		2020		2021		2020
Change in fair value of interest rate swaps	$	5.0	$	4.7	$	14.5	$	(10.4)
Tax benefit (expense)	(1.2)		(1.1)		(3.4)		2.4
Unrealized gain (loss) on designated cash flow hedge	$	3.8	$	3.6	$	11.1	$	(8.0)

The interest expense, recognized from accumulated other comprehensive loss from the monthly settlement of our interest rate swaps and amortization of the termination payments, included in our consolidated statements of operations were as follows (in millions):


	Three Months Ended September 30,				Nine Months Ended September 30,
	2021		2020		2021		2020
Interest expense	$	5.0	$	4.6	$	14.6	$	9.6

We expect to recognize an additional $3.7 million of interest expense out of accumulated other comprehensive loss over the next twelve months.

The fair value of our interest rate swaps included in our consolidated balance sheets were as follows (in millions):


	September 30, 2021		December 31, 2020


Fair value of derivative liabilities—current	$	(0.7)	$	(7.6)

Table of Contents

ENLINK MIDSTREAM, LLC AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

(Unaudited)

Commodity Swaps

The components of loss on derivative activity in the consolidated statements of operations related to commodity swaps are (in millions):


	Three Months Ended September 30,				Nine Months Ended September 30,
	2021		2020		2021		2020
Change in fair value of derivatives	$	(1.2)	$	(2.2)	$	(32.9)	$	(8.0)
Realized loss on derivatives	(32.4)		(2.9)		(122.3)		(0.3)
Loss on derivative activity	$	(33.6)	$	(5.1)	$	(155.2)	$	(8.3)

The fair value of derivative assets and liabilities related to commodity swaps are as follows (in millions):


	September 30, 2021		December 31, 2020
Fair value of derivative assets—current	$	75.3	$	25.0
Fair value of derivative assets—long-term	2.2		4.9
Fair value of derivative liabilities—current	(110.2)		(29.5)
Fair value of derivative liabilities—long-term	(2.3)		(2.5)
Net fair value of commodity swaps	$	(35.0)	$	(2.1)

Set forth below are the summarized notional volumes and fair values of all instruments related to commodity swaps that we held for price risk management purposes and the related physical offsets at September 30, 2021 (in millions). The remaining term of the contracts extend no later than January 2023.

September 30, 2021

Commodity

Instruments

Unit

Volume

Net Fair Value

NGL (short contracts)

Swaps

Gallons

(169.3)

(56.3)

NGL (long contracts)

Swaps

Gallons

7.8

1.4

Natural gas (short contracts)

Swaps

MMbtu

(9.8)

(17.6)

Natural gas (long contracts)

Swaps

MMbtu

14.2

25.0

Crude and condensate (short contracts)

Swaps

MMbbls

(7.8)

(32.7)

Crude and condensate (long contracts)

Swaps

MMbbls

3.8

45.2

Total fair value of commodity swaps

(35.0)

On all transactions where we are exposed to counterparty risk, we analyze the counterparty’s financial condition prior to entering into an agreement, establish limits, and monitor the appropriateness of these limits on an ongoing basis. We primarily deal with financial institutions when entering into financial derivatives on commodities. We have entered into Master ISDAs that allow for netting of swap contract receivables and payables in the event of default by either party. If our counterparties failed to perform under existing commodity swap contracts, the maximum loss on our gross receivable position of $77.5 million as of September 30, 2021 would be reduced to zero due to the offsetting of gross fair value payables against gross fair value receivables as allowed by the ISDAs.

Table of Contents

ENLINK MIDSTREAM, LLC AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

(Unaudited)

(12) Fair Value Measurements

Assets and liabilities measured at fair value on a recurring basis are summarized below (in millions):


	Level 2
	September 30, 2021		December 31, 2020
Interest rate swaps (1)	$	(0.7)	$	(7.6)
Commodity swaps (2)	$	(35.0)	$	(2.1)

____________________________

(1)The fair values of the interest rate swaps are estimated based on the difference between expected cash flows calculated at the contracted interest rates and the expected cash flows using observable benchmarks for the variable interest rates.

(2)The fair values of commodity swaps represent the amount at which the instruments could be exchanged in a current arms-length transaction adjusted for our credit risk and/or the counterparty credit risk as required under ASC 820, Fair Value Measurement.

Fair Value of Financial Instruments

The estimated fair value of our financial instruments has been determined using available market information and valuation methodologies. Considerable judgment is required to develop the estimates of fair value; thus, the estimates provided below are not necessarily indicative of the amount we could realize upon the sale or refinancing of such financial instruments (in millions):


	September 30, 2021				December 31, 2020
	Carrying Value		Fair Value		Carrying Value		Fair Value
Long-term debt (1)	$	4,392.6	$	4,466.7	$	4,593.8	$	4,318.2
Installment payable (2)	$	10.0	$	10.0	$	—	$	—
Contingent consideration (2)	$	6.9	$	6.9	$	—	$	—

____________________________

(1)The carrying value of long-term debt includes current maturities and is reduced by debt issuance costs of $28.9 million and $32.6 million as of September 30, 2021 and December 31, 2020, respectively. The respective fair values do not factor in debt issuance costs.

(2)Consideration paid for the acquisition of Amarillo Rattler, LLC included $10 million to be paid on April 30, 2022 and a contingent consideration capped at $15 million and payable between 2024 and 2026 based on Diamondback Energy’s drilling activity above historical levels. Estimated fair values were calculated using a discounted cash flow analysis that utilized Level 3 inputs. For additional information regarding this transaction, refer to “Note 2—Significant Accounting Policies.”

The carrying amounts of our cash and cash equivalents, accounts receivable, and accounts payable approximate fair value due to the short-term maturities of these assets and liabilities.

The fair values of all senior unsecured notes as of September 30, 2021 and December 31, 2020 were based on Level 2 inputs from third-party market quotations.

Table of Contents

ENLINK MIDSTREAM, LLC AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

(Unaudited)

(13) Segment Information

Starting in the first quarter of 2021, we began evaluating the financial performance of our segments by including realized and unrealized gains and losses resulting from commodity swaps activity in the Permian, Louisiana, Oklahoma, and North Texas segments. Commodity swaps activity was previously reported in the Corporate segment. We have recast segment information for all presented periods prior to the first quarter of 2021 to conform to current period presentation. Identification of the majority of our operating segments is based principally upon geographic regions served:

•Permian Segment. The Permian segment includes our natural gas gathering, processing, and transmission activities and our crude oil operations in the Midland and Delaware Basins in West Texas and Eastern New Mexico;

•Louisiana Segment. The Louisiana segment includes our natural gas and NGL pipelines, natural gas processing plants, natural gas and NGL storage facilities, and fractionation facilities located in Louisiana and our crude oil operations in ORV;

•Oklahoma Segment. The Oklahoma segment includes our natural gas gathering, processing, and transmission activities, and our crude oil operations in the Cana-Woodford, Arkoma-Woodford, northern Oklahoma Woodford, STACK, and CNOW shale areas;

•North Texas Segment. The North Texas segment includes our natural gas gathering, processing, and transmission activities in North Texas; and

•Corporate Segment. The Corporate segment includes our unconsolidated affiliate investments in the Cedar Cove JV in Oklahoma, our ownership interest in GCF in South Texas, and our general corporate assets and expenses.

Table of Contents

ENLINK MIDSTREAM, LLC AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

(Unaudited)

We evaluate the performance of our operating segments based on segment profit and adjusted gross margin. Adjusted gross margin is a non-GAAP financial measure. Summarized financial information for our reportable segments is shown in the following tables (in millions):


	Permian		Louisiana		Oklahoma		North Texas		Corporate		Totals
Three Months Ended September 30, 2021
Natural gas sales	$	159.3	$	183.2	$	58.2	$	32.2	$	—	$	432.9
NGL sales	0.4		898.6		0.3		(0.1)		—		899.2
Crude oil and condensate sales	194.4		62.5		21.2		—		—		278.1

Product sales	354.1		1,144.3		79.7		32.1		—		1,610.2

NGL sales—related parties	301.4		39.5		180.2		131.2		(652.3)		—
Crude oil and condensate sales—related parties	—		—		—		1.5		(1.5)		—
Product sales—related parties	301.4		39.5		180.2		132.7		(653.8)		—
Gathering and transportation	12.8		16.3		44.6		39.0		—		112.7
Processing	7.5		0.9		26.5		27.0		—		61.9
NGL services	—		16.9		—		—		—		16.9
Crude services	5.5		10.3		2.8		0.1		—		18.7
Other services	0.2		0.4		0.1		0.1		—		0.8
Midstream services	26.0		44.8		74.0		66.2		—		211.0



Crude services—related parties	—		—		0.1		—		(0.1)		—
Other services—related parties	—		0.1		—		—		(0.1)		—
Midstream services—related parties	—		0.1		0.1		—		(0.2)		—
Revenue from contracts with customers	681.5		1,228.7		334.0		231.0		(654.0)		1,821.2
Cost of sales, exclusive of operating expenses and depreciation and amortization (1)	(576.6)		(1,110.8)		(218.0)		(149.4)		654.0		(1,400.8)
Realized loss on derivatives	(8.7)		(14.9)		(6.8)		(2.0)		—		(32.4)
Change in fair value of derivatives	10.2		(8.8)		(2.3)		(0.3)		—		(1.2)
Adjusted gross margin	106.4		94.2		106.9		79.3		—		386.8
Operating expenses	(37.3)		(30.5)		(19.8)		(19.3)		—		(106.9)
Segment profit	69.1		63.7		87.1		60.0		—		279.9
Depreciation and amortization	(35.4)		(34.6)		(52.3)		(28.5)		(2.2)		(153.0)

Gain on disposition of assets	0.1		0.2		—		0.1		—		0.4
General and administrative	—		—		—		—		(28.2)		(28.2)
Interest expense, net of interest income	—		—		—		—		(60.1)		(60.1)

Loss from unconsolidated affiliates	—		—		—		—		(2.3)		(2.3)

Income (loss) before non-controlling interest and income taxes	$	33.8	$	29.3	$	34.8	$	31.6	$	(92.8)	$	36.7
Capital expenditures	$	25.8	$	0.4	$	10.3	$	3.3	$	0.6	$	40.4

____________________________

(1)Includes related party cost of sales of $4.9 million for the three months ended September 30, 2021 and excludes all operating expenses as well as depreciation and amortization related to our operating segments of $150.8 million for the three months ended September 30, 2021.

Table of Contents

ENLINK MIDSTREAM, LLC AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

(Unaudited)


	Permian		Louisiana		Oklahoma		North Texas		Corporate		Totals
Three Months Ended September 30, 2020
Natural gas sales	$	46.5	$	76.4	$	40.1	$	16.0	$	—	$	179.0
NGL sales	0.1

Enlink Midstream, Llc (ENLC) SEC Filing 10-Q Quarterly Report for the period ending Thursday, September 30, 2021

SEC Filings

ENLC Valuations

ENLC Annual Reports

ENLC Quarterly Reports

ENLC Corporate News