EnLink Midstream(US:ENLC)2023-08-02 18:50Financial Data and Key Metrics Changes - For Q2 2023, the company generated $334 million of adjusted EBITDA, representing an 11% growth over the prior year, and is on pace to achieve the midpoint of its 2023 adjusted EBITDA guidance of just over $1.35 billion [25][34] - Free cash flow after distributions for Q2 came in at approximately $96 million, with capital expenditures and plant relocation expenses net to the company at $88 million [34][58] - The company maintained its common unit distribution of $12.5 per unit in Q2, reflecting an 11% increase over the same quarter in 2022 [35] Business Line Data and Key Metrics Changes - In the Permian segment, profit for Q2 2023 was $91.8 million, with a 12% sequential growth but an 8% decrease from the prior year [30][31] - Oklahoma's segment profit was $110.7 million for Q2 2023, showing a 13% sequential growth and an 18% increase from the prior year [32] - North Texas reported a segment profit of $67.3 million, with a 1% sequential growth and a 16% increase from the prior year [33][55] Market Data and Key Metrics Changes - The company noted robust demand for natural gas, with a 43% increase in demand over the last 10 years, and a 110% increase in the Gulf States of Louisiana and Texas [50] - The EIA projects natural gas generating capacity will increase significantly through 2050, indicating a strong market outlook for natural gas [26] Company Strategy and Development Direction - The company is focused on sustainable growth through the energy transformation, leveraging its traditional midstream business alongside its new carbon transportation business [48][49] - The company aims to capitalize on the growing demand for CO2 transportation, having established a significant agreement with ExxonMobil [51][52] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the ongoing energy transformation and the need for traditional energy services, particularly natural gas, to meet future demands [48][50] - The company is well-positioned to benefit from the energy transformation, with expectations of continued growth in its CO2 transportation business [27][28] Other Important Information - The company has been aggressive in managing risks for 2024, having hedged natural gas prices effectively [1][2] - The company is ahead of pace in its $200 million unit repurchase program for 2023, having spent approximately $60 million in Q2 [35] Q&A Session Summary Question: Thoughts on CCS business implications from market announcements - Management believes they are well-positioned in the CCS market due to their extensive pipeline network in Louisiana and successful partnerships, including with ExxonMobil [5] Question: Clarification on EBITDA multiple for CCS opportunities - The company estimates a five times EBITDA multiple based on projects in development, with an expected total capital of $1.5 billion by 2030 [14][15] Question: Update on CapEx tracking - The company is trending towards the higher end of its CapEx range for the year, with expectations for adjusted EBITDA at the midpoint [17] Question: Future M&A landscape - Management noted a cooling off in the M&A market but remains focused on finding synergistic bolt-on opportunities [10][11] Question: Expectations for growth in the Permian and Oklahoma - Management expects a ramp-up in the Midland gas business and is optimistic about continued activity in Oklahoma despite some rig reductions [70][72]