Why Were EnLink Midstream’s Distributions Flat in 4Q15?



ENLK’s market performance

EnLink Midstream Partners (ENLK) has lost 62.6% of its market value during the past one year. It has lost 35.3% since the beginning of 2016. The recent decline in ENLK’s stock price can be attributed to the huge decline in commodity prices from the start of 2016.

ENLK’s peers, DCP Midstream Partners (DPM), Enable Midstream Partners (ENBL), and Crestwood Equity Partners (CEQP) have fallen 50.0%, 62.1%, and 83.4%, respectively, during the past one year. At the same time, the Alerian MLP ETF (AMLP), which comprises 22 midstream energy MLPs, has fallen 42.2%. This indicates a general weakness in the midstream sector. However, EnLink Midstream Partners underperformed AMLP, most likely due to its declining throughput volumes at some major assets.

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ENLK’s 4Q15 distributions

ENLK declared a distribution of $0.39 per share for 4Q15. This represents a flat distribution over the previous quarter and a ~4.0% YoY increase over 4Q14. At the same time, ENLK’s general partner, EnLink Midstream (ENLC), declared a distribution per unit of $0.26.

ENLK’s recent acquisitions

EnLink Midstream completed ~$4.7 billion of acquisitions, dropdown, and organic projects in one year until the third quarter. This figure excludes the $1.6 billion Tall Oak Midstream acquisition completed in the beginning of this year. Tall Oak’s assets include gathering and processing assets in the liquids-rich STACK play.

According to Barry E. Davis, ENLK’s president and CEO (chief executive officer), “The Tall Oak assets are anchored by long-term, fee-based contracts, with Devon being the largest customer on the system due to its acquired Felix acreage. We remain committed to maintaining our strong balance sheet and investment-grade credit profile while also providing long-term value to our unitholders by growing our business prudently and profitably.”

The partnership expects to complete two more dropdown acquisitions, including the Access Pipelines and the NGPL Pipelines, from its sponsor, Devon Energy (DVN), in the first six months of 2016.


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