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Edited Transcript of ENBL earnings conference call or presentation 6-Aug-19 2:00pm GMT

Q2 2019 Enable Midstream Partners LP Earnings Call

Oklahoma City Aug 13, 2019 (Thomson StreetEvents) -- Edited Transcript of Enable Midstream Partners LP earnings conference call or presentation Tuesday, August 6, 2019 at 2:00:00pm GMT

TEXT version of Transcript

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Corporate Participants

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* Craig S. Harris

Enable Midstream Partners, LP - Executive VP & COO of Enable GP LLC

* John Paul Laws

Enable Midstream Partners, LP - Executive VP, CFO & Treasurer of Enable GP LLC

* Matt Beasley

Enable Midstream Partners, LP - Senior Director, Financial Planning & Analysis and IR

* Rodney J. Sailor

Enable Midstream Partners, LP - President, CEO & Director of Enable GP LLC

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Conference Call Participants

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* Colton Westbrooke Bean

Tudor, Pickering, Holt & Co. Securities, Inc., Research Division - Director of Midstream Research

* Danilo Marcelo Juvane

BMO Capital Markets Equity Research - Analyst

* Gabriel Philip Moreen

Mizuho Securities USA LLC, Research Division - MD of Americas Research

* Jeremy Bryan Tonet

JP Morgan Chase & Co, Research Division - Senior Analyst

* Ned Antonov Baramov

Wells Fargo Securities, LLC, Research Division - Associate Analyst

* Shneur Z. Gershuni

UBS Investment Bank, Research Division - Executive Director in the Energy Group and Analyst

* Torrey Joseph Schultz

RBC Capital Markets, LLC, Research Division - Analyst

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Presentation

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Operator [1]

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Good day and welcome to the Enable Midstream Partners Second Quarter 2019 Earnings Conference Call and Webcast. (Operator Instructions) Please note, this event is being recorded.

I would now like to turn the conference over to Enable's Senior Director of Investor Relations, Mr. Matt Beasley. Please go ahead.

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Matt Beasley, Enable Midstream Partners, LP - Senior Director, Financial Planning & Analysis and IR [2]

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Thank you, and good morning, everyone. Presenting on this morning's call are Rod Sailor, our President and CEO; and John Laws, our Chief Financial Officer. We also have other members of the management team in the room today to answer your questions. Earlier this morning, we issued our earnings press release and filed our Form 10-Q with the SEC. Our earnings press release, Form 10-Q filing and the presentation that accompanies this call are all available in the Investor Relations section of our website. We will also be posting a replay of today's call to the website.

Today's discussion will include forward-looking statements within the meaning of the securities laws. Actual results could differ materially from our projections, and a discussion of factors that could cause actual results to differ from projections can be found in our SEC filings. We will also be referencing non-GAAP financial measures on today's call, which we have reconciled to the nearest GAAP measures in the appendix to today's presentation. We invite you to review the disclaimers in this presentation for both forward-looking statements and non-GAAP financial measures.

With that, we'll get started, and I will turn the call over to Rod Sailor.

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Rodney J. Sailor, Enable Midstream Partners, LP - President, CEO & Director of Enable GP LLC [3]

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Thanks, Matt. Good morning, and thank you for joining us on today's call. Enable had another solid quarter highlighted by growth across key operational and financial measures when compared to the second quarter of last year. For operational measures, Enable saw growth in natural gas gathered volumes, natural gas processed volumes, crude oil and condensate gathered volumes and natural gas transported volumes. Our crude oil and condensate gathered volumes were the highest quarterly volumes we have reported, which were primarily driven by the Velocity acquisition and continued growth in the Williston Basin.

For financial measures, Enable grew net income, adjusted EBITDA, distributable cash flow and distribution coverage. Our Board declared a common unit distribution of $0.3305 for the second quarter, representing a onetime increase in the rate of distributions on our LP units of approximately 4% compared to the first quarter's distribution, which equates to a $0.05 increase on an annualized basis.

After the distribution increase, our distribution coverage ratio of 1.37x funded over 60% of our expansion capital spending for the quarter. I plan to cover more on the distribution increase on the next slide. But before I do, I want to highlight the amended Schedule 13D that CenterPoint filed last night with the SEC. In this filing, CenterPoint indicates it does not intend to reduce its common unit ownership in Enable and currently plans to hold its common units and utilize any cash distributions to finance a portion of its capital expenditure program, which we believe removes the overhang on Enable units. CenterPoint and OG&E have been strong supporters of Enable strategy through their Board representation, and we look forward to our sponsors' continued support on Enable's strategic direction.

The next slide highlights the key drivers for the quarter's distribution increase. As you can see, we have achieved strong performance since 2015, growing both distributable cash flow and distribution coverage each year over the period. I am very proud of our performance and track record of stable or growing distributions to our LP unitholders while maintaining our financial objectives. Specifically, since 2015, Enable has increased its distribution coverage and self-funded a significant portion of its expansion capital program, which has included the completion of new projects and acquisitions in key areas.

Given Enable's financial performance, we believe now is the right time for Enable to increase the cash return to investors through a distribution increase. With this increase, Enable still achieves strong distribution coverage of 1.37x for the quarter, and we are reaffirming our 2019 distribution coverage outlook target of 1.3 to 1.45x.

Turning to our Gathering and Processing highlights on the next slide. Enable's Gathering and Processing segment continues to serve significant producer activity with 44 rigs currently drilling wells that are expected to be connected to Enable's gathering systems. Enable remains a market leader in the SCOOP and STACK plays where we expect to connect wells to our gathering systems from over 50% of the active rigs in these plays. While we have seen a reduction in rig activity compared to last quarter, producers continued to improve efficiencies. According to Drillinginfo, SCOOP and STACK operators have reduced the number of days required to drill a well in the SCOOP and STACK by an average of 11% between the first and second quarters of 2019.

In the second quarter, Enable saw increases in crude oil and condensate gathered volumes in the Anadarko Basin and continues to benefit from the Velocity acquisition and the shift in rig activity to oilier parts of the SCOOP. In the Ark-La-Tex Basin, Enable leveraged its scale and asset position to provide a producer market access through a short-term offload agreement, which benefited volumes in the quarter and further demonstrates the creative market solutions Enable provides its customers.

In the Williston Basin, Enable saw record crude oil gathered volumes during the quarter, driven by continued drilling activity by XTO and the duct count continues to grow in the basin due to third-party natural gas infrastructure constraints that we expect to be alleviated as new infrastructure comes online later this year.

Turning to our Transportation and Storage segment on the next slide. We contracted or extended over 600,000 dekatherms per day of transportation capacity during the quarter, including EGT, extending a long-term contract with Arkansas Electric Cooperative Corporation for 110,000 dekatherms per day and MRT extending a contract with Ameren Illinois for 80,000 dekatherms per day.

Enable and CenterPoint Energy Resources Corporation, or CERC, previously signed precedent agreements outlining terms and conditions for extending EGT pipeline contracts, which currently expire on March 31, 2021. CERC has received the required regulatory approvals and EGT is preparing the definitive long-term contracts that reflect CenterPoint's latest volume needs for the LDCs that we serve across EGT's footprint.

The MRT rate case continues to advance at the FERC. The hearing date that was originally set for November 2019 has been rescheduled to early 2020, and we recently received testimony from FERC staff and intervenors that we continue to review. As of January 1 of this year, MRT's proposed rate increase is being billed to customers subject to refund depending upon the outcome of the case. We remain focused on ensuring that the pipeline's rates appropriately reflect historical investments and current costs.

We achieved several important milestones for our Gulf Run pipeline project during the second quarter. As part of the FERC prefiling process, Enable hosted public open houses for stakeholders and the commission conducted public scoping meetings during the quarter. Enable remains in active discussions with customers for additional capacity commitments and anticipates finalizing the scope of the project prior to the filing of a formal certificate application, which we now expect to do in early 2020.

Before turning the call over to John, I would like to note a few key takeaways. Our performance highlights the value of our integrated midstream platform and our commitment to financial discipline. We continue to leverage our existing footprint, deliver creative commercial solutions, and we remain focused on our strategy of extending our reach across the midstream value chain. I am very pleased that this track record of success has resulted in today's distribution increase announcement.

I will now turn the call over to John to further discuss our second quarter 2019 operational and financial results.

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John Paul Laws, Enable Midstream Partners, LP - Executive VP, CFO & Treasurer of Enable GP LLC [4]

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Thank you, Rod, and good morning, everyone. I will now cover a few of our key operational and financial metrics for the quarter. As always, you can find a more detailed and comprehensive overview of our financial and operational results in our second quarter earnings release and in our 10-Q, both of which were issued earlier this morning.

Turning to Slide 9. Customer activity and well results in the Anadarko Basin drove volume growth in our Gathering and Processing segment compared to the second quarter of 2018. As you can see, we had a 4% increase in total natural gas gathered volumes and a 9% increase in total natural gas processed volumes in the second quarter of 2019 compared to the prior year. The substantial increase in our crude oil and condensate gathered volumes for the second quarter compared to the same period a year ago was primarily driven by our recent Anadarko Basin acquisition as well as a 29% increase in crude oil gathered volumes in the Williston Basin as a result of continued drilling activity by XTO. In our Transportation and Storage segment, a 14% increase in our transported volumes over the prior year was a result of new contracted capacity on EGT, including volumes from EGT's case project.

Moving on to our financial results on the next slide. Our adjusted EBITDA increased by 15% for the second quarter of 2019 when compared to 2018. The higher adjusted EBITDA was driven by higher gross margin after adjusting for noncash items due to higher natural gas gathered and processed volumes and higher crude oil and condensate volumes, the effects of which were partially offset by higher O&M and G&A due to an increase in payroll-related cost, a decrease in the amount of capitalized overhead cost and an increase in insurance costs as a result of additional assets placed in service.

Distributable cash flow when compared to prior year increased by 15% for the second quarter of 2019. The increase was primarily driven by higher adjusted EBITDA partially offset by higher adjusted interest expense associated with the higher outstanding debt balances and higher interest rates. The increase in our net income measures for the second quarter of 2019 compared to 2018 were primarily driven by higher gross margin, which includes the effect of realized and unrealized gains and losses on our derivative activity.

Enable's gross margin for the second quarter 2019 included a $16 million gain on derivative activity compared to a $14 million loss on derivative activity for the second quarter of 2018, resulting in an increase in gross margin of $30 million. The increase in gross margin was partially offset by slightly higher O&M expenses, higher depreciation and amortization expense and higher interest expense. The higher depreciation and amortization expense was primarily associated with the Velocity acquisition, additional assets placed in service and results of a new depreciation study.

After considering the distributions declared, including the distribution increase, Enable generated substantial distribution coverage of 1.37x for the quarter, which financed over 60% of our second quarter expansion capital while maintaining our strong balance sheet with significant liquidity and a debt-to-EBITDA metric of less than 4x.

With the Q2 results and our latest expectations for 2019 performance, Enable is affirming our 2019 financial outlook, including our expansion capital outlook. As a result of commodity price decreases in the fourth quarter of 2018 that resulted in a significant gain on derivative activity during that quarter on hedges to be settled in future periods, we currently anticipate that we will be at the lower end of our 2019 outlook range for net income attributable to common units.

I will now turn the call back over to Rod for his final marks.

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Rodney J. Sailor, Enable Midstream Partners, LP - President, CEO & Director of Enable GP LLC [5]

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Thanks, John. Enable is a strong company that is built for the long term. Our large-scale, fully integrated midstream platform is a critical link between growing production in downstream markets. Our contracts are primarily fee-based, and we expect approximately 96% of gross margin for the balance of the year to be fee-based or hedged. We have achieved strong business performance with over 40% growth in adjusted EBITDA from 2015 to the midpoint of our 2019 outlook range. Our investment-grade balance sheet is strong, and we have significant liquidity available to fund future expansions.

The next slide highlights our track record as a responsible operator and community partner. We are committed to designing, constructing and operating our assets with a focus on environmental stewardship and regulatory compliance. As an INGAA member, we have joined with others in the industry to commit to continuously improving practices to minimize methane emissions from interstate natural gas transmission and storage operations in a prudent and environmentally responsible manner.

We have been a member of the EPA's voluntary Natural Gas STAR program at our Wetumka plant since 2003, achieving voluntary methane emissions reductions at the facility through a combination of process improvements and capital investments, and we have applied these lessons learned to each of our new processing facilities built after 2008. We have participated in species conservation programs, including programs for the Lesser Prairie Chicken and the American Burying Beetle. Over the past 5 years, Enable has piloted a new right-of-way maintenance method that reduces right-of-way maintenance costs while improving maintenance access and promoting biodiversity beneficial to pollinator and wildlife habitats.

In recognition of these efforts, the National Wild Turkey Federation presented Enable with its Energy for Wildlife National Achievement Award and the Arkansas Game and Fish Commission awarded Enable its Corporate Conservation Partnership Award. Enable is also a strong supporter of communities across our footprint both through financial donations and employee volunteer time. Enable encourages employees to be active in the communities we live and work in and to further that provides each employee up to 16 hours of paid time-off per year for charitable volunteer activities.

In 2018, Enable employees spent over 20,000 hours serving local communities. Enable is a proud supporter of the United Way, and Enable and its employees pledged $560,000 to United Way agencies across the company's footprint during our most recent United Way campaign. We have also partnered with the Oklahoma City Thunder to build basketball courts in Oklahoma communities, and we are honored emergency responders in 2018 through the Enable's Safety Partner Program. In closing, we continue to work every day to make Enable a better, stronger company, and we remain committed to sustainable long-term value creation. That concludes my remarks.

And I will now open the call up for your questions.

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Questions and Answers

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Operator [1]

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(Operator Instructions) And our first question comes from Jeremy Tonet of JPMorgan.

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Jeremy Bryan Tonet, JP Morgan Chase & Co, Research Division - Senior Analyst [2]

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Just wanted to circle up with how you see producer activity shaping up in your neck of the woods? It seems like the rigs have fallen a bit, but the efficiencies improved there and so is this kind of trajectory of volumes in line with your guidance? And do you see any changes there? Or any thoughts as far as how that trajectory might end the year versus your expectations? Just want to see if you're still comfortable in 2020 how things look going forward there?

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Rodney J. Sailor, Enable Midstream Partners, LP - President, CEO & Director of Enable GP LLC [3]

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Well, Jeremy, thanks for your question. As you know, we haven't given any 2020 guidance, but we still, as John mentioned, on his section of the call, reaffirmed our 2019 guidance. We've clearly seen a pullback in prices, but we continue to see activity along our footprint and as you know what we expect to see with this pullback in gas prices is producers continuing to target more oily areas across our footprint, specifically as you think about the Anadarko, the SCOOP area. It was one of the reasons that last year we made our acquisition in Velocity Midstream because we wanted to be sure that we were able to pick up that valuable piece of the commodity stream. So we're still -- again, we would have not made our decision around the distribution if we weren't comfortable with the position of the business as we stand here.

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Jeremy Bryan Tonet, JP Morgan Chase & Co, Research Division - Senior Analyst [4]

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Great. Thanks for that. And then just turning towards distribution increase there. I was wondering was there any consideration as far as unit repurchases as part of the mix here? Given that the yield is quite high on ENBL as it is right now, just wondering if unit purchases could play a role in the future as far as returning capital.

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Rodney J. Sailor, Enable Midstream Partners, LP - President, CEO & Director of Enable GP LLC [5]

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We look at all of our options when we make a decision, whether to keep the distribution flat, make an increase or look at other ways to use our capital. I appreciate the question, but we really felt that at this point in time, since we had not raised our distribution since 2015, that the first step that we should go in is, again, is the distribution increase that we made -- or announced this morning. So anyway, that's where we stand, we'll continue to evaluate other options as we develop our plans for future capital.

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Operator [6]

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Our next question comes from Shneur Gershuni of UBS.

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Shneur Z. Gershuni, UBS Investment Bank, Research Division - Executive Director in the Energy Group and Analyst [7]

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I'm going to ask Jeremy's question, kind of, again, but maybe with a different bend to it. With respect to the production profile, you've got the rig count down call it 20%, but you've got efficiencies up. Maybe to ask the question a little differently, do you see that drilled uncompleted inventory in a year from now the same as it is today? Is there enough of an efficiency pickup to offset the drop in rig count, I guess, effectively is the question.

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Rodney J. Sailor, Enable Midstream Partners, LP - President, CEO & Director of Enable GP LLC [8]

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We can't really talk about 2020, so I'll continue to ring that bell. Again, we feel like that we're going to continue to see a shift towards more oily areas. The SCOOP is a more mature basin so there could be more pad drilling. We're very comfortable with the trajectory of the business as we work through 2019. We'll give further guidance on 2020. We typically do that on our November call or what used to be our November call. So I think, again, as we stand here we would not have made our distribution increase, we didn't make that increase lightly. We thought about it, we factored in how we expect the business to perform and so again, very comfortable with the performance and the direction of Enable Midstream.

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Shneur Z. Gershuni, UBS Investment Bank, Research Division - Executive Director in the Energy Group and Analyst [9]

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Okay. Fair enough. And just with respect to the return of capital, can you walk us actually through the decision tree itself? And I do appreciate that you hadn't increased you distribution since 2015 and so forth. I was just kind of wondering if you can walk us through the decision tree going forward. I mean you are more than 50% on your CapEx so it does make sense to consider it, but to Jeremy's point, do you consider unit buybacks on a go-forward basis? Or is this more about the general partner would prefer to get cash flows and higher IDR payments? And is that overwhelming the math on buyback -- or unit buyback?

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John Paul Laws, Enable Midstream Partners, LP - Executive VP, CFO & Treasurer of Enable GP LLC [10]

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Shneur, this is John. I wouldn't necessarily point to the latter end of your comments with respect to the general partner on the IDRs, but I think as we think about it, just given the historical trajectory that the business has been on, the increases in distributable cash flow where we sit. Overall, with respect to our financial objectives, which we've continued to point to over the last number of years has primarily been driven around strong distribution coverage, maintaining an investment-grade balance sheet, which we have done, and we expect to continue to do. We haven't increased the return to shareholders for some time and felt that this was a good time to do that.

So as it relates to that same set of analysis on a go-forward basis, the decision tree would be fairly similar in terms of looking at longer-term expectations for the business, how we expect to perform in light of our current distribution policy relative to our financial objectives and being confident in our ability to maintain those. I think when we think about buybacks or something along those lines, we go back and consider the level of float in ENBL, which is not large, although it has increased this year with some of the other large unitholder transactions that have occurred, primarily the Ark line transaction that's occurred, but we don't necessarily think that buybacks are the right path forward for us today.

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Shneur Z. Gershuni, UBS Investment Bank, Research Division - Executive Director in the Energy Group and Analyst [11]

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One final question if I may, when I kind of think about the unicorn metrics in general, you kind of tick a lot of the boxes off, right? You've got the lower leverage, you've got the coverage, you've got the equity funding and so forth. I mean, the one piece that sort of -- the one checkmark that you don't have really is the fact that there are IDRs. Is there any discussion about trying to remove the IDRs and to sort of trying to simplify the structure a little bit further?

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Rodney J. Sailor, Enable Midstream Partners, LP - President, CEO & Director of Enable GP LLC [12]

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Well, I think what we have always said, and I want to reiterate, we're not in the IDRs as it stands here today. I think we have fairly consistently said, our goal here at Enable is to maintain as competitive cost of capital as we can to the extent that we view the IDRs as an issue that would be something that we would engage in conversations with our Board and our Board has always been very supportive of what Enable needs to do as it relates to its strategic direction in the business.

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Shneur Z. Gershuni, UBS Investment Bank, Research Division - Executive Director in the Energy Group and Analyst [13]

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If I can paraphrase, so you are saying there is no point in dealing with the IDRs until it becomes an issue?

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Rodney J. Sailor, Enable Midstream Partners, LP - President, CEO & Director of Enable GP LLC [14]

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Yes.

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Operator [15]

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Our next question comes from Gabe Moreen of Mizuho.

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Gabriel Philip Moreen, Mizuho Securities USA LLC, Research Division - MD of Americas Research [16]

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Just had a couple of questions. On the T&S side of things, can you speak to some of the pricing behind these contract renewals, both the ones you've achieved as well as the ones that are pending just in broad terms, are these up, down, largely flat?

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Craig S. Harris, Enable Midstream Partners, LP - Executive VP & COO of Enable GP LLC [17]

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I think if you look at it in total, Gabe -- this is Craig Harris. I think it'd be largely flat. It's a kind of mixed bag based on where certain customers sit within the system and so some of them are increases, some had more competitive environments, but I think generally, it's -- if you look at them in total, it's relatively flat.

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Gabriel Philip Moreen, Mizuho Securities USA LLC, Research Division - MD of Americas Research [18]

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Great. And then as it pertains to NGL hedging and nat gas hedging, clearly you've got a bit less exposure than some peers out there, but can you just talk about your approach to hedging 2020 in light of NGL markets and nat gas markets where they are today?

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John Paul Laws, Enable Midstream Partners, LP - Executive VP, CFO & Treasurer of Enable GP LLC [19]

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Yes, sure. Gabe, this is John. Our approach as it's been has really been to look at most closely at the next 12 months and where we are and target somewhere between 50% and 80%. Certainly, with respect to the current year which is what we're there, it's not ahead of that now and we're looking at stepping into 2020. We've been doing that. With some of the commodity pricing dynamics, we've not been quite as aggressive this year looking at some of the forward periods as we have been in years past just based on what we're seeing show up in the market, the forward marks, particularly plus a quarter, plus 2 quarters aren't actually realizing the way that we're seeing and realizing in the cash markets, which tends to be a little bit stronger on the gas side, so we have been a little bit slower to hedging, but we continue to move into our hedges as we think appropriate, again looking at that next 12 months.

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Gabriel Philip Moreen, Mizuho Securities USA LLC, Research Division - MD of Americas Research [20]

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And last question from me is a little broader. Some of your producer customers have started or in their process of monetizing some of their water delivery and disposal systems. Is that's something you'd ever be interested in? I know you obviously made a big step out with Velocity to kind of doing all service sort of offering there in the SCOOP. So just speaking generally, your thoughts on water and getting into that business?

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Rodney J. Sailor, Enable Midstream Partners, LP - President, CEO & Director of Enable GP LLC [21]

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Yes, I mean, water is a line of business that we have continued to look at and evaluate and to look if it makes sense. If we're already in the gas and the crude businesses that, that is something that we want to do. We do move some water in the Bakken, but -- so that's an area that we continue to evaluate as a potential line of business.

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Operator [22]

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Our next question comes from Colton Bean of Tudor, Pickering, Holt.

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Colton Westbrooke Bean, Tudor, Pickering, Holt & Co. Securities, Inc., Research Division - Director of Midstream Research [23]

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So appreciate the commentary just in terms of producers pivoting to more of an oily focus. So as that relates to the Ark-La-Tex system? Have you seen any changes in your discussions of counterparties there in terms of activity levels for the back half of the year?

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Rodney J. Sailor, Enable Midstream Partners, LP - President, CEO & Director of Enable GP LLC [24]

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No, we really haven't and we continue to see volume growth in the back half of 2019.

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Colton Westbrooke Bean, Tudor, Pickering, Holt & Co. Securities, Inc., Research Division - Director of Midstream Research [25]

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Got it. And so then it looks like the rig count has been fairly steady thus far and no real expectations, at least, over the near term then?

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Rodney J. Sailor, Enable Midstream Partners, LP - President, CEO & Director of Enable GP LLC [26]

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That's correct.

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Colton Westbrooke Bean, Tudor, Pickering, Holt & Co. Securities, Inc., Research Division - Director of Midstream Research [27]

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Got it. And then on the distribution increase, I think it's been asked a number of different ways, but as it relates to capital spend in 2020, should we read into that at all in terms of increasing distribution here? And maybe it portends a lower capital spend going forward?

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Rodney J. Sailor, Enable Midstream Partners, LP - President, CEO & Director of Enable GP LLC [28]

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No, I wouldn't read anything as it relates to capital spend going forward related to the distribution increase. As we said, we brought some projects online, the businesses continued to perform very well. We felt now was the time for distribution increase. So it really -- I wouldn't really draw a line between that and any future capital needs.

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Operator [29]

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Our next question comes from TJ Schultz of RBC Capital Markets.

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Torrey Joseph Schultz, RBC Capital Markets, LLC, Research Division - Analyst [30]

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What distribution coverage do you feel is appropriate just for your business longer term just given some of the changes or uncertainty on the rig activity?

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John Paul Laws, Enable Midstream Partners, LP - Executive VP, CFO & Treasurer of Enable GP LLC [31]

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Yes, good question, TJ, this is John. All we've guided to from a coverage standpoint is 2019, and as I mentioned a little bit earlier with respect to one of the questions around our go-forward distribution policy, we'll continue to target and maintain the financial objectives that we'd set out in the past around ensuring that our balance sheet is investment-grade as we think about the 2 primary determinants of that with respect to both coverage and leverage.

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Torrey Joseph Schultz, RBC Capital Markets, LLC, Research Division - Analyst [32]

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Okay, fair enough. And just one more, the MRT, the rate case, what's the next step there? You mentioned you're reviewing some testimony. Is the next event, the hearing that was moved I think into early 2020 or can anything occur prior to that?

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Rodney J. Sailor, Enable Midstream Partners, LP - President, CEO & Director of Enable GP LLC [33]

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Well, I would just say that we're -- we continue to be in settlement discussions with our customers. So we're hoping to move those forward.

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Operator [34]

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(Operator Instructions) Our next question comes from Ned Baramov of Wells Fargo.

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Ned Antonov Baramov, Wells Fargo Securities, LLC, Research Division - Associate Analyst [35]

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I think you noted some short-term gas offloading opportunities in Ark-La-Tex. Maybe can you talk about what's the average term of these agreements? And are there additional such opportunities?

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Rodney J. Sailor, Enable Midstream Partners, LP - President, CEO & Director of Enable GP LLC [36]

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That was a very short-term in nature. We just were able to take advantage of our system and provide a producer the ability to move some gas. Again, one of the things that we talk a lot about is trying to have significant scale in the areas that we operate. And we have historically seen a number of opportunities to move other customers' gas given the reach of our -- the scale. We're seeing a lot in the Anadarko. This was one that came to bear in the Haynesville.

So yes, I think those opportunities will continue to be out there and really it depends on whether we have the capacity. Our Haynesville system is close to full at the moment, but to the extent we can find those. I think Enable has always tried itself on finding creative solutions for customers, both long term and short term. This was a short-term opportunity. We did not want to pass up. We may or may not be able to find that opportunity again in that area, but our commercial folks are continuing to look, continuing to talk to customers.

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Ned Antonov Baramov, Wells Fargo Securities, LLC, Research Division - Associate Analyst [37]

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Got it. And then switching gears to Gulf Run. Could you maybe provide some color as to why the announcement of the final scope is taking a little bit longer than originally anticipated?

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Rodney J. Sailor, Enable Midstream Partners, LP - President, CEO & Director of Enable GP LLC [38]

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Again, the one thing I want to make sure that I state is it really hasn't moved our in-service date any at all. We have a lot of front-end time built in. It really just relates to we continue to have discussions with customers about coming onto that system, our ability to expand the size of that system and so given that it doesn't impact our in date -- our in-service date, we felt it important to continue to have those discussions and that's why we've moved it out. It's strictly only related to our continuing efforts to try to increase the size of that pipeline.

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Operator [39]

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Our next question comes from Danilo Juvane of BMO Capital.

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Danilo Marcelo Juvane, BMO Capital Markets Equity Research - Analyst [40]

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I wanted to ask Shneur's question maybe a little bit differently on the distribution. Just -- obviously, you've increased distribution right now, today here. Obviously, it underscores that you have faith and confidence in the strength of your business, but in terms of sustainability of that going forward, and I know that you're not necessarily given out guidance, but how should we think about that going forward?

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Rodney J. Sailor, Enable Midstream Partners, LP - President, CEO & Director of Enable GP LLC [41]

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We have -- look, we've always taken great pride in the fact that when we make a distribution announcement, we're making covenant that if you like we need to continue to maintain that distribution. So we did not take distribution increases lightly, we do not take our distribution lightly.

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Operator [42]

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This concludes our question-and-answer session. I would like to turn the conference back over to Mr. Sailor for any closing remarks.

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Rodney J. Sailor, Enable Midstream Partners, LP - President, CEO & Director of Enable GP LLC [43]

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Well, again thanks, everybody on the call for your interest in Enable. In closing, I just want to recognize all of our employees for their hard work and dedication and to everybody on the call, please have a safe day.

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Operator [44]

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The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.