EnLink Midstream Partners’ Distribution Growth Plans
EnLink Midstream Partners (ENLK) declared a flat distribution of $0.39 per unit for 2Q17. It was the seventh consecutive quarter with a flat distribution. Based on the recent distribution, the partnership is trading at an attractive distribution yield of 9.5%. EnLink Midstream LLC (ENLC), EnLink Midstream Partners’ general partner, also declared a flat distribution of $0.225 per unit.
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On distribution growth resumption, Mike Garberding, EnLink Midstream Partners’ CFO, said, “Resuming distribution growth remains a long term priority of EnLink, and as we stated before, we do have the opportunity to commence distribution growth at ENLC, prior to ENLK.” The partnership isn’t expected to resume distribution growth in 2017 considering its significant growth plans for 2017 and low coverage.
Distributable cash flows
EnLink Midstream Partners’ distributable cash flows increased to $154.3 million in 2Q17 compared to $150.9 million in 2Q17—a YoY (year-over-year) increase of 2.2%. The increase was mainly driven by YoY EBITDA growth. EnLink Midstream Partners still reported a decline in its distribution coverage despite flat distributions and distributable cash flow growth. The decline could be attributed to EnLink Midstream Partners’ equity issuances to fund a portion of its 2017 capital budget. EnLink Midstream Partners’ distribution coverage fell to 1.02x in 2Q17—compared to 1.03x in 2Q16.
The partnership is expected to spend $505 million–$645 million on growth projects by the end of 2017. It already spent $467 million in 1H17, which left a lower amount for 2H17. Most of EnLink Midstream Partners’ 2017 capex will be spent on the Oklahoma segment.
In the next part, we’ll discuss EnLink Midstream Partners’ financial position.