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WES, ENLK, ENBL, DCP: Comparing Leverage Positions

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Total outstanding debt

DCP Midstream (DCP) has the highest total outstanding debt among our select peers. DCP’s total outstanding debt was $5.2 billion as of September 30. The partnership’s debt has risen following its merger with its GP (general partner). The partnership recently announced the issuance of preferred units to repay its “2.500% Senior Notes Due December 1, 2017,” as a related investor presentation noted.

DCP is followed by EnLink Midstream Partners (ENLK), which had $3.7 billion of total outstanding debt by the end of the third quarter. Western Gas Partners (WES) and Enable Midstream Partners (ENBL) ended 3Q17 with a total outstanding debt of $3.3 billion and $2.7 billion, respectively.

Net debt-to-adjusted EBITDA

DCP Midstream’s higher total outstanding debt translates into higher leverage compared to the other three peers. DCP’s net debt-to-adjusted EBITDA (earnings before interest, tax, depreciation, and amortization) ratio was 4.8x by the end 3Q17. DCP is followed by EnLink Midstream Partners with a net debt-to-adjusted EBITDA ratio of 4.3x. DCP and ENLK’s leverage is higher than the industry standard. MLPs generally target a leverage ratio between 4.0x and 4.5x.

Western Gas Partners and Enable Midstream Partners are better placed in terms of leverage with net debt-to-adjusted EBITDA multiples of 3.0x and 3.4x, respectively.

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