EnLink Midstream(US:ENLC)2021-08-04 19:43Financial Data and Key Metrics Changes - EnLink achieved adjusted EBITDA of $258 million in Q2 2021, representing over 6% growth from the prior year, net of MVC payments that ended in 2020 [9] - The company generated approximately $72 million in free cash flow after distributions during Q2 2021, bringing the trailing 12 months total to nearly $360 million [9][26] - The debt to adjusted EBITDA ratio was just below 4.1 times at quarter end, nearing the near-term leverage goal of under four times [34] Business Line Data and Key Metrics Changes - The Permian segment generated $44 million in segment profit, with average natural gas gathering volumes up 11% from Q1 2021 and 18% from Q2 2020 [16][17] - Louisiana segment profit for Q2 2021 was $67.3 million, a 5.5% increase over the prior year quarter, with strong cash flow of $65.1 million [20] - Oklahoma segment profit was $85.6 million, significantly up from $55.5 million in Q1 2021, with cash flow of $80.7 million [21][22] - North Texas segment profit was $57.9 million, slightly below the $61.9 million reported in Q1 2021, with gathering volumes increasing 2% from Q1 2021 [24] Market Data and Key Metrics Changes - The company noted strong producer activity across key basins, particularly in Oklahoma and North Texas, contributing to improved growth outlook for 2022 [44] - The Mississippi River Corridor in Louisiana is identified as one of the largest CO2 emitting regions, presenting opportunities for the Carbon Solutions Group [13] Company Strategy and Development Direction - EnLink's execution plan focuses on optimizing existing business, maintaining financial flexibility, and pursuing disciplined growth [10][11][12] - The formation of the Carbon Solutions Group aims to capitalize on carbon capture, utilization, and sequestration opportunities [13][39] - The company is exploring low capital, high return opportunities in Louisiana and expanding its Midland basin capacity through creative solutions [12][20] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the growth potential in 2022, driven by increased producer activity and strong commodity prices [44][36] - The company expects to end 2021 in the upper end of the adjusted EBITDA guidance range of $1.02 billion to $1.06 billion [36][38] Other Important Information - EnLink has maintained significant cost reductions achieved in 2020, which are expected to be sustainable in the current modest growth environment [28][29] - The company repurchased $10 million of common units between June and July, indicating a shift towards a more balanced capital allocation approach [35] Q&A Session Summary Question: Growth rate expectations for 2022 - Management noted increased producer activity in key basins and expressed optimism about growth in 2022, but did not provide specific guidance [44][45] Question: Capital allocation strategy regarding debt and buybacks - Management confirmed plans to pay down remaining term loan through cash flow while also considering buybacks and distribution increases [48][49] Question: Carbon Solutions Group opportunity size - The addressable market for carbon solutions is vast, with 80 million to 100 million metric tonnes of CO2 emissions in the Mississippi River Corridor [51][52]