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Enable Raises 2018 Outlook as Natural Gas Leads Record G&P Growth in 1Q

Oklahoma City-based Enable Midstream Partners LP saw multiple records set in the first quarter amid ongoing natural gas production growth in the Anadarko Basin and Haynesville Shale, the company reported Wednesday.

Speaking on a call to discuss quarterly earnings, Enable CFO John Laws said total natural gas gathered volumes reached an all-time high of 4.28 trillion Btu/d in 1Q2018, up 30% from 1Q2017, while processed volumes were up 19% over the same time to a record high 2.22 trillion Btu/d.

Crude oil volumes also rose year/year, reaching nearly 25,000 b/d in 1Q2018, an increase of about 17% over 1Q2017, primarily due to the expansion of the Bear Den system and the commissioning of multi-well pads on the Bear Den and Nesson systems.

Much of the record gains occurred in the Anadarko Basin, where natural gas gathered volumes reached 2.02 trillion Btu/d during the first quarter, up from 1.75 trillion Btu/d in 1Q2017. Processed volumes reached 1.82 trillion Btu/d in 1Q2018, up from 1.54 trillion Btu/d in the year-ago quarter.

Strong producer activity in the South Central Oklahoma Oil Province (SCOOP) and the Sooner Trend of the Anadarko Basin, mostly in Canadian and Kingfisher counties (STACK) drove gains in the region. As of April 25, 26 rigs were drilling wells expected to be connected to Enable’s gathering systems. Thirteen of those rigs were located in the SCOOP and 12 were in the STACK.

Intrastate transportation deliveries also increased in the first quarter as a result of the continued supply growth in the Anadarko. Enable reported that average intrastate deliveries hit 1.97 trillion Btu/d during the quarter, up 7% from 1Q2017.

Meanwhile, the midstream company’s Project Wildcat system remains on schedule and is expected to enter service by the end of the second quarter. Just last week, Continental Resources Inc. announced that it had signed up for the full 400 MMcf/d capacity on the natural gas pipeline that would connect Midcontinent supplies to growing demand in North Texas.

Enable’s Cana and STACK Expansion project, a 205,000 Dth/d firm natural gas pipeline designed to provide residue takeaway solutions for growing production from the Cana Woodford play as well as STACK, is expected to be fully in service by the fourth quarter of 2018. The company’s Muskogee project -- a 20-year, 228,000 Dth/d firm transportation service agreement with Oklahoma Gas and Electric on the Enable Oklahoma Intrastate Transmission (EOIT) system -- is also expected to begin service in late 2018.

In addition, Enable was awarded two long-term, fee-based gathering and processing contracts for multi-well infill projects in the active liquids-rich windows of the SCOOP. So far this year, Enable has contracted or extended over 300,000 Dth/d of capacity on the Enable Gas Transmission, LLC (EGT) system and 75,000 Dth/d of capacity on the EOIT system.

The company also continues to negotiate with potential shippers on the previously announced Line CP open season and plans to provide an update on the project by the partnership's second quarter 2018 earnings release, Laws said.

Enable’s gathering and processing growth also has come from activity in the Ark-La-Tex Basin, where nine rigs were drilling wells on the company’s system. The company expects robust growth in the region to continue as 1Q2018 gathered volumes of 1.71 trillion Btu/d increased 76% over 1Q2017 volumes and were up 109% over 1Q2016.

In fact, due to continued producer activity and strong well performance, natural gas gathered volumes on one of the Haynesville gathering systems in the Ark-La-Tex Basin are forecast to exceed minimum volume commitment levels for the current annual measurement period, Laws said.

Enable reported earnings of $257 million for 1Q2018, up $36 million from 1Q2017. Distributable cash flow (DCF) rose to $196 million for the quarter, up $25 million year/year.

Capital expenditures were $190 million for the period, compared to $61 million in 1Q2017. Expansion capital expenditures were $176 million in the first quarter, compared to $47 million for 1Q2017.

Given the quater’s record volumes, Enable updated its expansion capital outlook for 2018 to range from $475 million to $625 million. In addition, the midstream company updated its 2018 earnings to be between $975 million and $1.05 billion, with DCF to be between $675 million and $735 million.

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