OKLAHOMA CITY–(BUSINESS WIRE)–Enable Midstream Partners, LP (NYSE: ENBL) announced today that the partnership is taking significant measures to strengthen its financial position in response to current industry conditions. Taken together, the actions announced today are expected to result in an annualized increase in retained cash flow of approximately $450 million and position Enable to fully fund its business and reduce total debt in 2020.
The board of directors of Enable’s general partner has approved a 50% reduction in the partnership’s quarterly distribution per common unit from $0.3305 to $0.16525. This reduction will result in Enable having nearly $290 million of additional cash on an annualized basis, providing meaningful financial flexibility and funding for Enable’s capital investment program.
Enable is reducing 2020 total expansion capital expenditures by $115 million, or 48%, from the top end of the previously provided outlook, which included capital projects not expected to contribute revenues in 2020. The remaining expansion capital expenditures primarily represent projects to serve incremental firm transportation commitments or to support expected levels of contracted producer activity.
Enable is removing costs from its business and estimates achieving approximately $35 million of savings in 2020, growing to run-rate savings of approximately $70 million in 2021 for operation and maintenance and general and administrative expenses. After considering its commitment to safe and reliable operations, technology investment and other projects, Enable expects a reduction in maintenance capital of $20 million, or 17%, from the midpoint of the previously provided outlook for 2020. Enable also expects to maintain this $20 million reduction next year.
“Due to the sharp decline in commodity prices and producer activity across our footprint and the future business uncertainty created by the coronavirus pandemic, we are taking decisive action to fortify our financial position, protect our balance sheet and ensure liquidity to navigate these unprecedented market conditions,” said Rod Sailor, president and CEO. “We continue to work with our customers and to refine our costs and capital, not only to maintain maximum financial flexibility but also to ensure a high level of safe and reliable service.
“Enable has implemented a number of initiatives to respond to the risks created by this pandemic and is focused on protecting the health and safety of our employees, customers and the communities where we work and live while providing vital energy infrastructure services during this crisis,” added Sailor.
Enable has ample liquidity available under its $1.75 billion revolving credit facility. The partnership has no near-term senior notes maturities, with the next senior notes maturity not due until 2024. The partnership’s term loan and revolving credit agreements have scheduled maturity dates in 2022 and 2023, respectively, that could be extended.
During this market downturn, Enable continues to benefit from its scale and diversified asset and customer base. The partnership has long-term relationships with large-cap producers and utilities, and the largest customers on each of Enable’s interstate and intrastate natural gas pipelines are investment-grade utilities. Enable has significant fee-based contracts in both its transportation and storage and gathering and processing segments, and the partnership still expects its gross margin to be over 90% fee-based or hedged for 2020.
Enable plans to provide an update to its 2020 outlook during its first quarter earnings call in May.
ABOUT ENABLE MIDSTREAM PARTNERS
Enable owns, operates and develops strategically located natural gas and crude oil infrastructure assets. Enable’s assets include approximately 14,000 miles of natural gas, crude oil, condensate and produced water gathering pipelines, approximately 2.6 Bcf/d of natural gas processing capacity, approximately 7,800 miles of interstate pipelines (including Southeast Supply Header, LLC of which Enable owns 50%), approximately 2,300 miles of intrastate pipelines and eight natural gas storage facilities comprising 84.5 billion cubic feet of storage capacity. For more information, visit www.enablemidstream.com.
Some of the information in this press release may contain forward-looking statements. Forward-looking statements give our current expectations, contain projections of results of operations or of financial condition, or forecasts of future events. Words such as “could,” “will,” “should,” “may,” “assume,” “forecast,” “position,” “predict,” “strategy,” “expect,” “intend,” “plan,” “estimate,” “anticipate,” “believe,” “project,” “budget,” “potential,” or “continue,” and similar expressions are used to identify forward-looking statements. Without limiting the generality of the foregoing, forward-looking statements contained in this press release include our expectations of plans, strategies, objectives and anticipated financial and operational performance, including estimated capital expenditures, estimated reductions in operation and maintenance and general and administrative expenses and anticipated increases in cash flows. Forward-looking statements can be affected by assumptions used or by known or unknown risks or uncertainties, including risks resulting from the ongoing spread and economic effects of the novel coronavirus (COVID-19) and the recent actions of Saudi Arabia and Russia which have resulted in a substantial decrease in oil and natural gas prices. The combined impact of these events on commodity prices have resulted in significantly reduced capital expenditures by our upstream customers, which is expected to impact our operating results, liquidity and financial condition and may impact our recorded goodwill and other financial metrics. Consequently, no forward-looking statements can be guaranteed.
A forward-looking statement may include a statement of the assumptions or bases underlying the forward-looking statement. We believe that we have chosen these assumptions or bases in good faith and that they are reasonable. However, when considering these forward-looking statements, you should keep in mind the risk factors and other cautionary statements in this press release and in our Annual Report on Form 10-K for the year ended Dec. 31, 2019 (“Annual Report”). Those risk factors and other factors noted throughout this press release and in our Annual Report could cause our actual results to differ materially from those disclosed in any forward-looking statement. You are cautioned not to place undue reliance on any forward-looking statements.
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Leigh Ann Williams