Commodity price collapse-driven woes continued in the midstream sector Monday. CenterPoint Energy Inc. said it is weighing options for its investment in Enable Midstream Partners, including a sale or spinoff. And separately, Azure Midstream Partners LP has temporarily suspended its distribution.
CenterPoint owns a 50% general partner interest and a 55.4% limited partner interest in Enable, a publicly traded master limited partnership that it jointly controls with OGE Energy Corp.
CenterPoint CEO Scott Prochazka said Enable grew its distributions during 2015 and continues to enjoy volume growth despite a challenging commodity price environment. "With continued connections and drilling activity across its system, Enable is well-positioned for long-term growth as commodity markets recover," he said. "We believe that now is the right time to explore options for unlocking the value of our strategic investment..."
Enable assets are mainly in Oklahoma, Arkansas and North Louisiana, as well as North Dakota.
Last week, Enable announced an updated outlook for 2016 expansion capital of $375 million, reflecting a reduction of about 66% from the midpoint of its previous outlook. Enable said it has delayed the in-service date for the 200 MMcf/d Wildhorse Processing Plant until late 2017. The partnership said it will provide additional information on its 2016 outlook during its fourth quarter earnings call on Feb. 17. Enable also announced a $363 million exchange of units for notes with CenterPoint.
"I believe these announcements are an effective response to today's challenging market conditions," said Enable CEO Rod Sailor, President and Chief Executive Officer. "These transactions combined with the reduction of our 2016 expansion capital reduce the need to issue common equity in this market and further strengthen Enable’s balance sheet, improving our credit metrics and eliminating a 2017 debt maturity."
Separately, Dallas-based Azure Midstream said it has temporarily suspended its distribution while it pursues "a number of options to strengthen its balance sheet, including a potential equity restructuring, capital raise and strategic alternatives that will provide excess liquidity with the intent to give visibility into stabilizing future distributions."
Azure is looking for a "one and done solution" to liquidity problems during a period of low commodity prices that could present a "multi-year" challenge, said CEO Chip Berthelot. Azure plans to report financial results for the fourth quarter on March 10. Its assets are in the Haynesville Shale and horizontal Cotton Valley plays.
Last week, Kinder Morgan Inc. announced a $1 billion term loan (see Daily GPI, Jan. 27) and said it was planning to sell stakes in two of its projects (see Daily GPI, Jan. 28).