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Which Segment Will Drive EnLink Midstream’s 4Q15 Performance?

Kurt Gallon

EnLink Midstream Partners: Will It Beat or Miss 4Q15 Estimates?

(Continued from Prior Part)

EnLink Midstream’s Texas segment

Texas is EnLink Midstream Partners’ (ENLK) largest business segment. The segment alone accounted for 52% of the company’s total segment profit in 3Q15. It mainly provides natural gas gathering, processing, transportation, and fractionation services.

The Texas segment’s 3Q15 segment profit decreased by 5.0% YoY (year-over-year) driven by higher operating expenses and the decline in throughput volume at the segment’s North Texas assets. This decline was offset by the increase from the Coronado Midstream acquisition. The segment’s 4Q15 performance is expected to be driven by the recent acquisitions of gathering and processing assets.

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EnLink Midstream’s Louisiana segment

EnLink Midstream’s Louisiana segment mainly provides natural gas and NGL (natural gas liquids) transportation and processing. The segment’s 3Q15 profit increased by 58% YoY compared to 3Q14. The trend is expected to continue in the fourth quarter, driven by the Cajun-Sibon pipeline expansion and the natural gas pipeline acquisitions completed along the Gulf Coast.

EnLink Midstream’s Oklahoma segment

EnLink Midstream’s Oklahoma segment provides natural gas gathering and processing services in the Oklahoma region. It saw its 3Q15 segment profit decrease by 8.0% YoY. The decrease was due to lower throughput volumes. EnLink management expects the trend to reverse in the fourth quarter.

EnLink Midstream’s Crude and Condensate segment

EnLink Midstream’s Crude and Condensate segment is involved in crude oil transportation and marketing via rail, truck, pipelines, and barges. The segment saw its segment profit more than double in 3Q15 compared to 3Q14, driven by the acquisition of LPC Oil Marketing and the dropdown acquisition of Victoria Express Pipeline from ENLK’s sponsor, Devon Energy (DVN).

These recent acquisitions might continue to drive the segment’s profit in 4Q15 on a YoY basis. However, Crude and Condensate might experience a QoQ (quarter-over-quarter) decline in segment profit due to declining crude oil prices.

Sunoco Logistics Partners (SXL) and Genesis Energy (GEL) might experience a similar decline at their crude oil marketing businesses. ENLK forms 2.1% of the Global X MLP ETF (MLPA).

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