|Bid||0.0000 x 3000|
|Ask||4.9000 x 3200|
|Day's Range||4.4400 - 4.9400|
|52 Week Range||4.3300 - 13.1000|
|Beta (3Y Monthly)||1.90|
|PE Ratio (TTM)||N/A|
|Earnings Date||Feb 17, 2020 - Feb 21, 2020|
|Forward Dividend & Yield||1.13 (25.32%)|
|1y Target Est||7.08|
(Bloomberg Opinion) -- When a stock goes into free fall, one hope is that some acquirer out there will catch it. Sometimes, though, suitors come with their own complications. That brings us to EnLink Midstream LLC.EnLink operates gathering and processing pipelines and other oil and gas infrastructure across several onshore U.S. basins. In the summer of 2018, Devon Energy Corp., an exploration and production company, sold its stakes in various EnLink entities to Global Infrastructure Partners for just over $3.1 billion. After a subsequent simplification of EnLink, GIP owns 46% of the common units, now worth $1.2 billion.EnLink has been undone by weaker commodity prices. Earlier this month, Devon announced it had dropped the number of rigs operating in one of Oklahoma’s shale basins to precisely zero (how’s that for a coda to last year’s deal?). This confirmed a trend evident already in permitting and drilling data for the Anadarko basin, where just four companies account for the majority of activity; and, crucially, they have operations in other basins that are more competitive in terms of breakeven costs.The distribution yield on EnLink’s stock now scrapes 20% — on a par with the current yield on long-dated bonds of Chesapeake Energy Corp., which just issued a going-concern notice. There’s being paid to wait, as they say, and then there’s being paid to wait in that trash compactor from Star Wars.EnLink’s cash flow math is tight. Consensus forecasts — which have now had time to digest cost savings pledged on the latest earnings call — put Ebitda at $1.1 billion in 2020. Take off around $500-$550 million for cash interest and (much-reduced) capital expenditure, and that leaves about $550-$600 million versus current distributions of about $550 million. With Ebitda forecast to grow at just 1% a year through 2022, that tight squeeze won’t ease up. Wells Fargo & Co.’s analysts estimated in a recent report that, absent a change in distribution policy, current leverage of 4.2 times adjusted Ebitda could reach almost 6 times by 2025. By any rational measure, the distribution should be cut.The complicating issue is that EnLink’s leverage is compounded by more leverage at the GIP level in the form of a $1 billion term loan. Technically, it is separate from EnLink’s own finances. But as the company acknowledges in its own 10K filing, debt owed by an entity owning almost half the company plus its managing partner, and which is serviced by EnLink’s own distributions, is very much a risk factor. By my calculations, the loan requires roughly $80 million a year of EnLink distributions (GIP didn’t respond to requests for comment)(1). As of now, distributions amount to about $255 million. So, in theory, EnLink could slash its payout by about two-thirds and GIP could still service the loan.In practice, that would be a bitter pill to swallow. As it is, GIP’s common units in EnLink are now worth not much more than the value of the loan and way below the original investment. Cutting distributions would certainly help EnLink’s balance sheet; all else equal, a 67% cut would save enough cash to take leverage below 4 times adjusted Ebitda, in line with long-term targets. But this would almost certainly push the value of GIP’s stake even lower, at least in the near term. As Ethan Bellamy, analyst at Robert W. Baird & Co. Inc., put it to me:Does GIP leverage prevent EnLink from cutting the distribution and right sizing the ship? It wouldn’t be the first time we’ve seen parental leverage from a private equity sponsor lead to sub-optimal outcomes for the subsidiary public entity.On the other hand, if EnLink cuts and its price falls further, then GIP might be tempted to make an offer for the rest of the company in an effort to salvage things out of the public eye. Needless to say, a takeover premium on an even lower EnLink price would do very little to make up for the losses suffered to date. We are seeing this play out with Blackstone Group Inc.’s offer for another midstream company, Tallgrass Energy LP, although the pain there is compounded by an agreement between the buyer and Tallgrass’s executives that effectively shields the latter from losses (see this).EnLink captures so much of what has gone wrong in America’s pipelines business. There’s the misalignment of interest between ordinary investors and the sponsors steering the company’s destiny. There’s the exposure to commodity markets from which, in theory, midstream companies were supposed to be insulated. Above all, there’s the overcapitalization of this sector, with obligations piled onto assets (largely to fund outsize payouts to controlling sponsors) that ultimately couldn’t generate the profits to service them (largely because too much stuff got built).Almost exactly four years ago, Kinder Morgan Inc. presaged the midstream reckoning to come by slashing its dividend. The stock has been listless for much of the period since then; even with the cut, chipping away at debts in a post-boom environment is a laborious process. As this decade of nominal success for America’s shale boom draws to a close, EnLink’s predicament shows the hangover remains very much a work in progress.(1) This assumes the full $1 billion remains outstanding. Interest is charged at Libor plus 4.25%, equating to 6.15%, or about $62 million. A debt-service covenant ratio of 1.1 times takes this to $68 million. Mandatory annual amortization of 1% of the loan plus assumed G&A costs results in an estimated minimum requirement of about $80 million to service the debt. Details derived from Moody's Corp.'s initial rating report from July 2018.To contact the author of this story: Liam Denning at email@example.comTo contact the editor responsible for this story: Mark Gongloff at firstname.lastname@example.orgThis column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.Liam Denning is a Bloomberg Opinion columnist covering energy, mining and commodities. He previously was editor of the Wall Street Journal's Heard on the Street column and wrote for the Financial Times' Lex column. He was also an investment banker.For more articles like this, please visit us at bloomberg.com/opinion©2019 Bloomberg L.P.
DALLAS , Nov. 13, 2019 /PRNewswire/ -- EnLink Midstream, LLC (NYSE: ENLC) (EnLink) announced today that representatives of EnLink will attend and meet with investors at the Wells Fargo Securities 18th ...
DALLAS , Nov. 7, 2019 /PRNewswire/ -- EnLink Midstream, LLC (NYSE: ENLC) (EnLink) reported financial results for the third quarter of 2019, updated certain 2019 full-year guidance metrics, and detailed ...
EnLink Midstream (ENLC) doesn't possess the right combination of the two key ingredients for a likely earnings beat in its upcoming report. Get prepared with the key expectations.
DALLAS , Oct. 15, 2019 /PRNewswire/ -- EnLink Midstream, LLC (NYSE: ENLC) (EnLink) today announced a quarterly declared distribution for the third quarter of 2019. The ENLC Board of Directors declared ...
Hedge Funds and other institutional investors have just completed filing their 13Fs with the Securities and Exchange Commission, revealing their equity portfolios as of the end of June. At Insider Monkey, we follow nearly 750 active hedge funds and notable investors and by analyzing their 13F filings, we can determine the stocks that they are […]
DALLAS , Oct. 2, 2019 /PRNewswire/ -- EnLink Midstream, LLC (NYSE: ENLC) (EnLink) announced today that a conference call to discuss third quarter financial and operational results will now be held on Friday, ...
Moody's Investors Service ("Moody's") has completed a periodic review of the ratings of EnLink Midstream, LLC and other ratings that are associated with the same analytical unit. The review was conducted through a portfolio review in which Moody's reassessed the appropriateness of the ratings in the context of the relevant principal methodology(ies), recent developments, and a comparison of the financial and operating profile to similarly rated peers. This publication does not announce a credit rating action and is not an indication of whether or not a credit rating action is likely in the near future.
Chairman and CEO of Enlink Midstream Llc (30-Year Financial, Insider Trades) Barry E Davis (insider trades) bought 136,700 shares of ENLC on 08/13/2019 at an average price of $7.32 a share. Continue reading...
EnLink Midstream (ENLC) delivered earnings and revenue surprises of -16.67% and -6.62%, respectively, for the quarter ended June 2019. Do the numbers hold clues to what lies ahead for the stock?
DALLAS , Aug. 6, 2019 /PRNewswire/ -- EnLink Midstream, LLC (NYSE: ENLC) (EnLink) reported financial results for the second quarter of 2019 and updated financial guidance for full-year 2019. EnLink also ...
DALLAS, Aug. 6, 2019 /PRNewswire/ -- EnLink Midstream, LLC (ENLC) (EnLink) announced today that Barry E. Davis, the company's Executive Chairman who led EnLink as its Chief Executive Officer from its founding in 2014 to 2018, will reassume the role of Chief Executive Officer, in addition to continuing to serve as Chairman, effective August 8, 2019. "I am very excited to return to lead EnLink during this defining time for our company and industry," Davis said. EnLink is competitively advantaged with a best-in-class team, differentiated portfolio of operations, deep customer relationships, strong financial profile, and a strategic partner, Global Infrastructure Partners (GIP), who is committed to investing in our long-term growth.
EnLink Midstream (ENLC) possesses the right combination of the two key ingredients for a likely earnings beat in its upcoming report. Get prepared with the key expectations.
While EnLink Midstream LLC (NYSE: ENLC ) may continue delivering growth at its Permian segment, its Oklahoma segment needs to achieve several quarters of outlook stability before a re-rating of the stock ...
ENLC continues declared distribution growth DALLAS , July 18, 2019 /PRNewswire/ -- EnLink Midstream, LLC (NYSE: ENLC) (EnLink) today announced a quarterly declared distribution for the second quarter of ...