Jill McMillan - VP, Communications & IR Barry Davis - President & CEO Mike Garberding - EVP & CFO Steve Hoppe - EVP and President, Gathering, Processing and Transportation Mac Hummel - EVP and President, Natural Gas Liquids, Crude and Condensate.

Darren Horowitz - Raymond James Jeremy Tonet - JPMorgan Jeff Birnbaum - Wunderlich Sharon Lui - Wells Fargo.

Good morning and welcome to the Q2 2015 EnLink Midstream earnings conference call. [Operator instructions] Please note this event is being recorded. I would now like to turn the conference over to Jill McMillan. Please go ahead..

Thank you, Kate, and good morning, everyone. Thank you for joining us today to discuss EnLink Midstream's second quarter 2015 results.

On the call today are Barry Davis, President and Chief Executive Officer; Mike Garberding; Executive Vice President and Chief Financial Officer; Steve Hoppe, Executive Vice President and President of the Gathering, Processing and Transportation business; and Mac Hummel, Executive Vice President and President of the Natural Gas Liquids, Crude and Condensate business.

We issued our second quarter 2015 earnings release this morning and we will file the 10-Q later today. To accompany today's call we have posted the earnings release on the Investor Relations portion of our website. If you would like to listen to a recording of today's call, you can access a webcast replay on our website.

I will remind you that any statements about the future, including our expectations, forecasts or predictions, should be considered forward-looking statements within the meaning of the federal securities laws.

Forward-looking statements are subject to a number of assumptions and uncertainties that may cause our actual results to differ materially from those expressed in these statements, and we undertake no obligation to update or revise any forward-looking statements.

We will discuss certain non-GAAP financial measures and you'll find definitions of these measures, as well as reconciliations of these non-GAAP measures to comparable GAAP measures, in our earnings release.

We encourage you to review the cautionary statements and other disclosures made in our SEC filings, specifically those under the heading Risk Factors. I will now turn the call over to Barry Davis..

Thank you, Jill. Good morning, everyone, and thank you for joining us on the call today. I'll begin with some high-level thoughts on the quarter and our key strategic advantages and then turn it over to our CFO, Mike Garberding, to review the numbers. Then Steve and Mac will discuss operations performance for the quarter.

We will end with a detailed discussion of our growth outlook and outline opportunities we see in each of our core avenues for growth. Before we get started, there are three key messages I want you to take away today.

First, we delivered solid performance in the first half of the year with volume growth across our asset base and continue to execute on our four avenues of growth. Second, we are uniquely positioned and have competitive advantages that others in our sector do not have.

And third, we will continue to take advantage of near and long-term growth opportunities from our strategic platform. Now let me remind you of how we got to where we are today.

As we are all aware, over the last nine months our industry has experienced challenging market conditions with a significant downturn in oil and gas prices, as well as decreases in rig counts and production. Additionally, we experienced several weather and operational events in the second quarter that negatively affected our results.

In the face of these headwinds, we have performed very well and produced solid performance and significant growth since the formation of EnLink, demonstrating the superior platform we created.

To-date we’ve accomplished everything we said we would do and we've executed the plan we laid out, including the completion of approximately $4.2 billion of dropdowns, growth projects and acquisitions.

We have been able to do this because we are operating from a position of competitive strength, allowing us to weather these difficult market conditions and emerge well positioned at the other end of these cycles. We have competitive advantages that others in our sector do not have.

It really comes down to four key differentiators; stability, diversity, scale and strong partnership with Devon. We are stable because we have the advantage of superior contracts. With approximately 95% of our gross operating margin being fee-based, we have limited direct commodity exposure.

Also approximately 50% of our gross operating margin is from long-term Devon contracts, the majority of which are supported by contracts with minimum volume commitments or MVCs. We have good diversity of basins and services, which is important in a down cycle like this.

We have operations in some of the best long-term plays such as the Permian, Eagle Ford, Cana-Woodford and a market-driven position in Louisiana. We have a strong investment-grade balance sheet which enables us to invest in organic growth projects and capitalize on strategic M&A opportunities.

And finally, our strong sponsorship from Devon provides a key competitive advantage by supporting our business with dropdown organic growth opportunities and fee-based contracts with MVCs.

Moving to our second quarter results, we had a strong quarter with consolidated adjusted EBITDA of approximately $190 million, up approximately $22 million for the first quarter and $19 million year-over-year.

Except for our outage at Cana, our volumes are basically flat to increasing across our platform through the first half of the year, with good increases in our Louisiana and crude and condensate segments.

We raised second quarter distributions by $0.005 at ENLK, which represents a 6% increase year over year, and $0.005 at ENLC, which represents a 14% increase year-over-year. In the first half of the year we performed in line with guidance expectations by focusing on execution.

A few of the highlights of our execution are the successful integration of three new businesses into EnLink, including Coronado and LPC in West Texas and Chevron's natural gas assets in South Louisiana. We are beginning to realize the near-term benefits of these assets.

In the Permian, our Coronado and LPC assets are seeing significant gas and crude volume growth. In South Louisiana we've executed on a number of optimization projects which required very little capital and provide immediate growth to our business.

In South Texas, we acquired the Victoria Express pipeline, or VEX, asset from Devon which provided a welcome entry into the Eagle Ford. In North Texas, we benefited from pressure reductions and increased volumes on our Wise and Denton County systems as a result of Devon's refrac program.

Importantly, we believe this continued success of their refrac program and additional pressure reduction efforts will offset near-term projected volume declines in North Texas by approximately 25%. Turning to our outlook for the second half of the year, we have good opportunities to continue offsetting the headwinds to achieve our guidance.

For 2015 we provided consolidated adjusted EBITDA guidance of approximately $740 million and the potential headwinds could represent approximately 2% or 3% of our original guidance for the year.

However, we are confident in our ability to overcome them as we've done in the first half of the year through the optimization of our assets, solid execution of our projects and capitalizing on near-term growth opportunities.

EnLink is a strong vehicle poised for growth and we remain confident in our ability to deliver strong results, even during challenging times in our industry. We have well-positioned assets and a strong financial foundation that allows us to successfully compete in times like these.

We have a proven track record of organic growth, asset dropdown, successful acquisitions and operational performance. We will continue to take advantage of near and long-term opportunities from our growing asset base, financial capacity and unique sponsorship with Devon. Let me now turn it over to Mike for our financial update..

Thanks, Barry, and good morning, everyone. I want to start by saying that we are pleased with how our business performed in the second quarter and we are confident in our abilities to create value over the near and long term.

Our investment-grade balance sheet, our top-tier sponsor, Devon, and our superior contract structure really differentiate us during times like this. Moving to the second quarter financials, EnLink realized consolidated adjusted EBITDA of approximately $190 million.

Our adjusted EBITDA for the quarter at the Partnership was approximately $175 million, which is up about $45 million from the first quarter.

This increase is due to the final EnLink Midstream holdings dropdown that closed in May for approximately $900 million, as well as a full quarter of contributions from the assets acquired in the LPC, Coronado, and VEX transactions.

The second EMH dropdown was a little later than anticipated as compared with our original guidance, which impacted the allocation of adjusted EBITDA between ENLK and ENLC for 2015, but did not affect our annual consolidated adjusted EBITDA.

Overall, volumes for the quarter were strong, with volumes either at or above first quarter levels across our assets, other than Cana processing, which is now back up and running at full capacity.

During the quarter we also received a one-time contract termination payment of approximately $10 million in our crude and condensate segment, in connection with the termination of a customer contract. This contract termination was an effective way to monetize the remaining portion of a short-term contract on an asset that was not being used.

The Partnership's distributable cash flow for the second quarter of 2015 was approximately $134 million, which is up approximately $35 million over the first quarter due to the final EnLink midstream holdings dropdown and performance of our new business.

The Partnership declared a distribution of $0.385 per unit for the quarter, which resulted in 1.05 times distribution coverage ratio, in line with what we said we had expected for this quarter. We anticipate the Partnership's distribution coverage ratio will be about 1 times for the year.

After adjusting the quarter's results for one-time items, such as the contract termination payment, the Cana plant outage and the cost to move a compressor in Cana, the pro forma coverage for the quarter would still be around 1 times.

Turning to our balance sheet, we issued around $900 million in senior notes in May, consisting of $750 million in 10-year bonds and $150 million of 30-year bonds. Proceeds from these offerings were primarily used to pay down our revolver, which provide us current liquidity of around $1.4 billion.

Our leverage remains in line with our expectations, with a debt-to-adjusted-EBITDA ratio of about 3.67 times at the end of the second quarter. For the quarter, ENLC had around $52 million cash available for distribution, which is flat as compared with the first quarter.

This results in a 1.25 times coverage ratio on the declared distribution of $0.25 per general partner unit. At the close of the second quarter of 2015 ENLC had a cash balance of approximately $63 million. We are currently evaluating our options with respect to how to deploy that capital and we are excited about the financial flexibility it creates.

In the first half of the year we did a great job offsetting the challenges of the current commodity price environment, which include reductions in drilling in certain areas of our portfolio, North Texas volumes and other one-time events, such as the Cana heat exchanger repairs and the temporary outage of our Louisiana fractionators.

In the second half of the year we think the potential risks to the business include many of the same challenges we have faced in the first half of the year. As Barry mentioned, we believe we have the ability to overcome future headwinds like we did in the first half.

For 2015 we provided consolidated adjusted EBITDA guidance of approximately $740 million, and the potential headwinds could represent approximately 2% to 3% of our original guidance for the year. We believe our annual distribution growth will be in line with our original guidance for 2015 of around 7.5% for ENLK and around 18.5% for ENLC.

However, the annual distribution growth for ENLK could be around 5.5% and the annual distribution growth for ENLC could be around 15.5% if the headwinds persist throughout the year.

We are confident in our ability to overcome these headwinds through the optimization of our assets, solid execution of our projects and capitalizing on near-term growth opportunities.

Just to remind you, the second drop of the EMH to ENLK was later than originally forecasted which impacted ENLK's 2015 adjusted EBITDA by around $20 million, with no impact to consolidated EBITDA.

Fortunately, we have prepared for times like this as we have limited direct commodity exposure given that our gross operating margin is around 95% fee-based. We have also protected ourselves well with minimum bond commitments on the Devon contracts, which represent about 50% of our gross operating margin and provide a floor on our margins.

On those contracts, we are currently around that floor. In summary, we believe the business has performed really well during the first half of the year and positions us for continued stability and growth. We have a strong investment-grade balance sheet that gives us great financial flexibility.

I will now turn the call over to Steve, who will discuss a gas business unit..

Thank you, Mike, and good morning, everyone. We're pleased with how the gas business unit performed in the second quarter and the first half of the year, and we're confident in our abilities to continue to grow this business. As we discussed last quarter, the Permian Basin is a key area in driving long-term growth for EnLink.

As a result of lower commodity prices, many producers are focusing their activities in this region because it continues to provide superior economic results. There are currently about 17 rigs operating on EnLink's dedicated acreage across the Midland Basin and we are seeing significant results from this activity.

Our system is supported by focused and active producers such as Diamondback, Reliance, RSP Permian and CrownQuest. Diamondback, in particular, has reported an 85% to 200% rates of return at $60 WTI prices, and 50% to 125% rates of return at $50 WTI prices.

Our recent acquisitions in the area have allowed us to expand our footprint and enhance our service platform.

In fact, our Permian operations contributed approximately 250 million BTU per day in gas volumes and about $16 million in gross operating margins in the second quarter of 2015, which is up from approximately 73 million BTUs per day at gas volumes and approximately $3.5 million to gross margin in the second quarter of 2014.

The results of the Coronado acquisition have so far exceeded our expectations and we remain focused on identifying additional opportunities in the region. Since the acquisition in March of this year, volumes have increased 20% and we expect total growth to reach 30% by the end of this year.

As part of the Coronado transaction we acquired the Riptide plant, which is now in early stages of construction. We expect the plant to be completed in the first half of 2016. The plant will add 100 million of capacity and connect to approximately 40 miles of high- and low-pressure gathering pipelines that are in various stages of construction.

This plant can easily be expanded to 200 million with minimum capital investment and time. Once complete we will have a seven County, five plant, rich gas gathering and processing super system that offers great access to markets for our customers' products. Moving to North Texas.

We have got the largest infrastructure in the prolific Barnett Shale, which continues to position us for long-term growth and stability. A large majority of income from the region is supported by long-term fixed-fee contracts and significant volume commitments from Devon.

We believe that our customers have a great future potential to resume drilling the thousands of rich gas locations that are around, and dedicated to, our North Texas assets, once commodity prices recover. In the near term this area requires a very low capital investment and our focus remains on asset optimization and consolidation opportunities.

Our second quarter results for North Texas were consistent with expectations. Overall the assets performed very well, especially considering that the heavy rains and flooding that occurred in the region over the second quarter. We gathered 1.7 BCF of gas. We transported 1.7 BCF per day of gas.

And we processed 1 BCF per day of gas, which contributed about $130 million to gross operating margins during the quarter.

I also want to point out that North Texas systems volumes remain relatively flat compared to the first quarter, due to higher volumes into our Wise and Denton County systems, asset optimization efforts and producer refrac programs.

In the second quarter we benefited from Devon's success in the Barnett with their vertical refrac program, in which they refracked approximately 100 wells of the 150 planned in the 2015 program.

Due to the success of this program, we are seeing other producers begin vertical refracs which we could benefit from in the second half of the year and into 2016. As Barry mentioned, we estimate that the Devon refrac program and our fresh reductions in North Texans will result in a 25% offset to the 2015 declines we previously projected.

Yesterday Devon announced their plans to start horizontal refracs in the Barnett in the second half of 2015, where they have an inventory of around 3,500 horizontal wells. Devon plans to test refracs on up to 15 horizontal wells in 2015.

The expansion of a horizontal refrac program in the Barnett Shale has the potential to stabilize the volume profile in the basin for many years to come, even under a low-priced commodity environment.

North Texas remains a significant source of cash flow for both EnLink and Devon, and we're working together to maintain the value that the basin brings to us both. We're focused on additional pressure reduction, the optimization of our assets and supporting growing producer refrac programs.

We're also executing on our consolidation strategy when we acquired a small private gathering system in Hill County. We hope for this to be the first of multiple consolidation opportunities in the region, to gain synergies from our existing footprint and offset future declines.

Our North Texas assets are geographically well-positioned and have a low operating cost structure to take advantage of additional consolidation opportunities. We are excited about the potential that we see in this area. Oklahoma remains an area with significant growth potential for EnLink.

As we stated previously, we expect to see Devon volumes increase in the second half of the year and we're excited about the drilling plans in the region.

In fact, Devon is currently running six operated rigs in the region and have already drilled approximately 50 wells, 10 of which we have connected and are flowing, and 40 that will be brought online in the second half of the year. They also have plans to drill an additional 25 wells in 2015.

While our processing volumes in Cana were temporarily impacted by the downtime we had at the Cana plant, you can see from the inventory of wells waiting to be completed that we expect those volumes to grow by the end of the year.

To accommodate these new volumes, we're expanding our Cana gathering system by 75 million cubic feet per day, of which will be operational in the fourth quarter of this year. We expect to spend around $50 million on growth in 2015 on this and other expansions in the area.

Before I turn the call over to Mac, I'd like to provide a quick update on the operational issue at our Cana plant in Oklahoma. The heat exchanger was replaced and the system has been back up and running at full capacity since the last week of June, which was 11 days ahead of our internal schedule due to the hard work by our team.

Overall, we remain extremely excited about the activity and the develops we are seeing in each of our operating regions.

Each area has motivated and confident producer customers that are exploiting technology, improving production results to remain successful and grow in a difficult commodity environment and we look forward to working with them in supporting these efforts.

I'll now turn the call over to Mac Hummel, who will give you an update on our natural gas liquids, crude and condensate business..

Thanks, Steve, and good morning. We're pleased to report a solid quarter for the liquids business unit. Starting first in our Louisiana businesses, as you know, Louisiana has a high demand natural gas and natural gas liquids region due to new and expanded LNG industrial and petrochemical facilities.

It's also a crossroads for the continued rebalancing of the domestic supply and demand picture, a process in which we are well positioned to participate. Capitalizing on the need for additional NGLs in Louisiana, during the second quarter the Cajun-Sibon pipeline transported an average of approximately 115,000 barrels per day.

And the Cajun-Sibon fractionation facilities fractionated Y-grade inlet volumes averaging approximately 120,000 barrels per day. Second quarter volumes were negatively affected by operational downtime, which drove both pipeline and fractionation volumes 5% lower than expected.

We are also capitalizing on our well-positioned truck and rail capabilities. During the second quarter we received average truck and rail volumes of approximately 20,000 barrels per day, up from the first quarter average of 8,500 barrels per day.

Some of those volumes are seasonal, so while we don't expect truck and rail volumes to be consistently that high, we do believe we can continue to provide service for truck and rail volumes needing a market. Our joint venture pipeline with Marathon, which is the first bolt-on project to Cajun-Sibon, is proceeding as expected.

The Corps of Engineers permit has been filed. 35% of the pipeline rights-of-way tracks have been acquired. We expected to be operational in the first half of 2017 and the project remains on track with regards to cost. During the second quarter we initiated work on two more bolt-on projects for our Cajun-Sibon system.

The first is a Eunice purity batching project which involves taking purity products from the Eunice area to Mississippi River markets via a NGL pipeline that was under-utilized after the Cajun-Sibon expansion.

Following the completion of the $17 million batching project before year-end, we project annual adjusted EBITDA of approximately $5 million per year.

The second new bolt-on project, this one at our Napoleonville storage facility, will add truck loading and unloading facilities that will provide additional flexibility to receive and load trucks out of our Napoleonville storage facility, as well as relieve congestion at our Riverside fractionator.

This project, which we estimate will require capital of $12 million, and is projected to be completed in the first half of 2016, is expected to generate annual adjusted EBITDA of approximately $4 million per year. Now turning to our Louisiana gas business.

Transmission volumes were higher by over 28,000 MMBTU per day in the second quarter, while processing volumes were higher by approximately 86,000 MMBTU per day.

As a result of the increased processing volumes, we restarted the Gibson processing plant, which has been operating near full capacity since its start-up in June and could contribute annualized adjusted EBITDA exceeding $3 million.

Due to our new exposure to power generation customers in our Louisiana gas business, we experienced a number of days in excess of 1.6 BCF day, compared to the second quarter average volumes of 1.4 BCF per day.

And to date in 2015, we've completed six integration and optimization projects that are expected to contribute approximately $3.5 million of adjusted EBITDA in 2015 and approximately $6 million on an annualized basis.

Because of the proximity of our Louisiana gas assets, these projects are highly capital efficient and will produce annual adjusted EBITDA nearly equal to the one-time capital required to complete them. We expect to complete several more projects during the balance of 2015 which could have similar capital to earnings profiles.

We're focused on the execution of near-term optimization projects that our strategic franchise position in the Louisiana provides, and we're just getting started. We see a number of potential longer-term growth projects, which Barry will discuss later in the call.

I'd next like to provide a quick update on the 15,000 barrel per day expansion of our Mesquite treater in the Permian Basin. At Mesquite we currently receive NGLs via truck and rail and transport the products to our Cajun-Sibon system.

The project under construction increases our capabilities to handle off-spec NGLs, on-spec and off-spec condensate and crude volumes, provide water disposal services and access market outlets via truck, rail, and pipeline. There is no EnLink capital required for this project, which we expect to be operational in the fourth quarter.

We'll now move to our crude and condensate business, which has historically been referred to as the ORV segment and which now includes ORV, LPC in the Permian Basin, the Louisiana crude terminals and the VEX pipeline in the Eagle Ford. The second quarter was a quarter of tremendous growth for our crude and condensate business.

Second quarter volumes averaged over 145,000 barrels per day, up 100% from the first quarter and over 5 times our year-end 2014 crude and condensate volumes. The crude and condensate business is not only our fastest-growing segment, but it also gives us expanded opportunities to serve Devon.

In the second quarter we provided crude and condensate services for Devon volumes totaling approximately 45,000 barrels per day between the Permian Basin and Eagle Ford.

Our LPC business performed well during the second quarter, handling approximately 75,000 barrels per day of crude and condensate, up from 68,000 barrels per day in the two months of the first quarter we owned the business.

As planned, we're pursuing opportunities to use the LPC business to expand into new areas, specifically we're exploring additional opportunities to grow into the Delaware Basin and to provide crude and condensate services to customers on the Coronado system.

During the second quarter we successfully moved approximately 5% of total volumes from trucks into new gathering pipelines, and we are working on a number of new opportunities for additional gathering systems. The Eagle Ford is the newest operating area in our crude and condensate business since the drop-down of the VEX pipeline on April 1.

We're focused on integrating these assets and completing the pipeline, terminal and storage expansion projects in the third quarter.

Second quarter volumes handled on the VEX system averaged nearly 34,000 barrels per day, split about equally between volumes transported to the Port of Victoria on the VEX pipeline and volumes delivered directly to the Port of Victoria truck terminal. Post expansion, Port of Victoria deliveries are expected to be made via the pipeline.

In ORV we experienced improved results, despite area producers increasingly moving their drilling to the dry gas areas of the Utica. Total volumes increased in the second quarter due to the efforts of our ORV team in the midst of challenging market dynamics, averaging 26,000 barrels per day, a 5,000 barrel per day increase from the first quarter.

We continue to evaluate the optimal timing for the construction of the proposed condensate pipeline, but also acknowledge the difficulty for producers to commit to the pipeline given the current price environment. Nonetheless, we remain well-positioned to execute on the pipeline when the timing is right.

The investments and progress we've made in the liquids business unit are well aligned with our long-term strategy. We have great assets in good locations and are confident that the liquids business unit will continue to drive growth moving forward. I will now turn the call back over to Barry for a discussion of our growth outlook..

the Permian Basin, the Eagle Ford, the Mid-Continent, and the Louisiana Gulf Coast region. Our four avenues of growth have served us extremely well and as we look forward, we remain confident that each avenue strategically positions EnLink for growth over the near and long term in these key growth areas.

I'll start with our first avenue of growth which is drop-downs. We have two potential drop-down opportunities from Devon. The first is the Access Pipeline, which both Devon and EnLink are evaluating for a possible 2016 drop-down.

And the second is the NGPL pipeline, which would connected growing Oklahoma production with our Bridgeport facility in North Texas through a multi-phased approach. I will discuss this opportunity in more detail in a moment.

The Access pipeline and NGPL pipeline opportunities could provide meaningful uplift to our cash flows and a tremendous opportunity to grow our service offerings. Our second avenue of growth is maximizing our relationship with Devon by responding to their growing midstream infrastructure needs.

Today EnLink Midstream is serving approximately 70% of Devon's gas volumes and we see significant growth potential with Devon in the Anadarko Basin, the Permian Basin, the Eagle Ford Shale and the Canadian Oilsands. Devon continues to see excellent results from their wells in the Anadarko Basin.

Yesterday they announced that their Haley wells in the Cana-Woodford exceeded the type curve by 50% and are the best wells they have drilled to date. They have identified stacked pay potentials across the majority of their 340,000 net acres, continue to improve Cana-Woodford results and have identified a promising opportunity in the new Meramec play.

In total, the Anadarko Basin provides Devon with more than 4,000 locations to develop, and this drilling inventory is one of the deepest most economic in their portfolio. We are extremely excited about the growth we expect to achieve from this activity and our position in the region.

The NGPL pipeline creates an excellent first step in combining our North Texas and Oklahoma assets and would be the first phase in a multi-phase process to connect growing Oklahoma production with our North Texas assets.

The 92-mile 20-inch pipeline extends from Southern Oklahoma near the south end of the SCOOP shale play to EnLink's Bridgeport plant in North Texas.

The first phase of a project could be to connect gas in Southern Oklahoma into the pipeline and process it at our Bridgeport plant, giving EnLink the ability to move rich gas out of Oklahoma into North Texas.

As customer demand increases, later phases could include connecting the northern end of the NGPL pipeline to our Cana gathering system looping the NGPL pipeline down to the Bridgeport plant.

As currently contemplated, the system’s capacity could reach up to 400 million cubic feet a day and could represent up to $500 million in capital investment opportunity.

This project could create a gathering and processing super system across Oklahoma and Texas, optimize our processing capacity and provide Oklahoma customers access to North Texas intra and interstate markets. In the Permian Basin, EnLink is in the very early stages of serving Devon's growth plans.

EnLink is transporting 4,000 barrels per day of crude volumes in the Delaware Basin. We see this as a first step in expanding either through organic development or acquisitions in the Delaware basin. Devon currently has 13 rigs operating in the Delaware Basin, with most of their acreage dedicated to other midstream providers.

We are diligently pursuing opportunities to take advantage of midstream service contracts that roll off, as well as providing additional services for stranded or bottlenecked product in the area. In the Eagle Ford EnLink just began serving Devon's crude and condensate production with the Victoria Express pipeline and storage assets.

We are in the very early stages of our growth there, but keep in mind that this pipeline and storage system provides direct access to Gulf Coast outlets for condensate refining and export terminals.

The Eagle Ford remains one of the most prolific and economic shale plays in North America and we see great potential from the platform we are building there. We were excited about these growth opportunities with Devon in these key producing regions, which will enable us to focus on increasing our cash flows.

Our third avenue is through the expansion of our core businesses and organic growth projects. Our greatest opportunities are in the Permian Basin, Mid-Continent and Louisiana Gulf Coast.

I'll start with the Louisiana Gulf Coast where we have the Chevron assets we acquired in November of last year, added to our existing assets to create the largest pipeline platform in the state. The work we've done since November is a great example of how we can optimize and grow our business organically.

We've identified four buckets of growth opportunities. Two of those buckets are improved access to new supplies and new or improved access to incremental markets and transportation customers. Mac addressed projects related to these buckets earlier.

Two additional buckets of growth that are larger, more complex and longer-term are the consolidation and rationalization of our Louisiana storage positions and the conversion of under-utilized gas pipeline assets to alternative services, such as liquids, crude and gas transmission.

On the storage front, we have the opportunity to have an integrated gas and liquids storage position with our Napoleonville and Sorrento storage assets.

The consolidation and rationalization of our storage assets would require capital in excess of $30 million and could generate over $10 million of annual adjusted EBITDA, possibly beginning as soon as 2016. We're also evaluating pipeline conversion opportunities, which are the largest and most complex of our South Louisiana opportunities.

As we optimize our Louisiana gas pipelines, we will create under-utilized portions of the pipeline systems that represent great potential for conversion to liquids or crude service, both of which we're pursuing.

Due to the work required and the complex nature of the opportunity, conversions of gas pipelines to liquid service will likely not begin contributing to adjusted EBITDA over the next couple of years.

If we are able to transact on a conversion opportunity which could easily require several hundred million dollars of investment, the adjusted EBITDA contribution could be multiples of the contribution currently provided by these assets.

So while the conversion potential is certainly exciting, we are also evaluating the opportunities to keep these pipelines in gas service at a higher utilization rate. The great news is that we have a lot of optionality created by our South Louisiana position to provide more than one type of service.

We also see tremendous potential for organic growth in the Permian Basin, where we are utilizing our existing assets to grow into new areas.

We currently have approximately 250,000 dedicated acreage in the Midland Basin and we're pursuing opportunities with potential customers on another 100,000 acres that would extend our system further into Howard, Upton, and Reagan Counties.

Future expansions are needed to allow us to meet the growth of our contracted customers and provide capacity to continue connecting new supplies of gas for customers in the region.

The combination of our Midland Basin system and the Coronado system have given us a geographic position in the basin and created opportunities we could not have successfully pursued independently.

We also established a foothold in the Delaware Basin through our acquisition of LPC earlier this year, and we are already seeing additional growth opportunities to expand our service offerings in the region. We are currently in negotiations with producers on multiple projects in the Delaware.

While it is too early to project the outcome of these efforts, we are confident that the Delaware will become a significant area for us in the future. Our fourth avenue of growth is M&A, where we have a proven track record of strategically leveraging acquisitions to enhance value for our customers and our unitholders.

We believe this is becoming a more buyer-friendly market with significant opportunities in the industry due to the current market environment. Because of our strong investment-grade balance sheet that provides us with a low cost of capital, we will continue to leverage the tremendous consolidation opportunities we see in our large fragmented market.

In summary, we were built for commodity environments like this one. We have the strong foundation and the significant and growth opportunities available to succeed throughout these cycles. We are confident that with the successful execution of our strategy, we can create value for our customers and unitholders today and well into the future.

With that, we would like to turn the call back to our operator, Kate, who will open the lines for your questions..

[Operator Instructions] The first question comes from Darren Horowitz with Raymond James. Please go ahead..

Hey, guys, good morning. Steve, first question is for you on North Texas.

As you outlined regarding that benefit from pressure reductions in Devon's vertical refracs, beyond the remaining 50 refacs Devon's set to complete before the end of this year, can you give us a rough sense or roughly quantify how much of a volume benefit you think of the other producer refracs could add to your North Texas throughput, either later this year or into early 2016?.

Right now it's really too early for us, they're just getting started on evaluating those programs. But if you look at the impact that Devon had in offsetting declines, they were running - I think you can kind of look at the Devon numbers that they reported and you can see they were running about 400 a day improved volumes.

And then, we were able to offset our declines, as we said, by about 25% overall. So that took our declines from 10% to about 7.5%..

And that was just on the vertical..

That was just on the vertical and they're starting a horizontal program, which we expect to be a much more improved and more significant opportunity..

Okay. And then if I could, switching gears over to the Eagle Ford, specifically the comments of leveraging the crude and condensate production with the VEX assets.

Now I'm curious and I realize it's early and may be difficult to quantify, but do you have a sense of what the incremental CapEx could be in order to vertically link those assets, as you mentioned, all the way downstream to the Gulf with regard to either incremental storage or export capabilities, but really get more demand pull through those assets?.

This is Mac Hummel, by the way. And let me just say that we're very excited about the entry into the Eagle Ford. We think VEX is a great asset. We picked up a great operations team and of course everybody knows it's a great basin.

Having said that, in terms of the linked system that you talked about, that gets all the way to Houston and storage assets in Houston, no, we haven’t looked at the extension of that asset to that degree. We have looked at other opportunities, perhaps link that with other areas.

And of course are in the midst of an expansion now which will take pipeline capacity from 50,000 barrels a day to 90,000 barrels per day..

Okay. And then last question for me. As it relates to further leveraging that Bridgeport plant specifically, as you mentioned, maybe an additional phase connecting that northern and into NGPL into the Cana system, and then looping it down to Bridgeport. It seems like you could even have more significant volume than 400 million cubic foot a day.

And I'm curious just from a wide-grade perspective, how you could further link that to get those physical hydrocarbons more downstream and get more of kind of a value-added opportunity even further down the system, because it would seem like the opportunity set just doesn't stop there..

We agree with you. We're really looking at this in a phased approach and it's going to be driven by the demand that we see and the growth that we see in Oklahoma. But we definitely see and are working on projects that will give us opportunities into that first 400 million and then I will let Mac address the downstream possibilities.

But one of the reasons why we're wanting to get rich gas into North Texas is we believe it's going to have better value and better takeaway at that location benefit would in Oklahoma..

Does anything - sorry, go ahead, Mac..

Go ahead..

I was curious, and I apologize for interrupting, you made some comments about the economic incentive in the Anadarko Basin around the Cana and Woodford.

I'm curious from a producer kind of net back perspective, how competitive do you think those rich gas volumes are? And if you ultimately think that could maybe even displace some South Texas or West Texas volumes to the extent that producers might get from a wide-grade or fully fractionated barrel, an even better return in terms of hooking in that Cana and Woodford production all the way downstream?.

Yes, Darren, this is Barry. Let me just comment very broadly on that. I think what we're hearing from the producers in the Mid-Continent and especially from Devon is that the returns on their development there are the best in their portfolio.

I think a key to making that - to sustaining that economic return is access to the best markets, which we think can happen through the North Texas connection and then ultimately opening up the pathway on down into the Gulf Coast of Texas for the residue gas and into the Mont Belvieu market for the NGLs.

And so while we're still fairly early, we're very focused on designing this project with optionality, so that we can continue to bolt on, as you say, as we see the development happen.

But we really are also we want to get something on the board, in the ground because we think right now there is an opportunity for that first $400 million, so as we do that we will certainly build in optionality..

Thanks, Barry..

Thank you, Darren. Appreciate it.

The next question comes from Jeremy Tonet with JPMorgan. Please go ahead..

Good morning. Thanks of for all the color today, very helpful. Sorry if I missed it in the prepared remarks, but it seems like there is a contract termination in the crude and condensate segment. I was wondering if you could provide a bit more detail on that..

Yeah, Jeremy, this is Mike. What it was is we had a customer within our Louisiana segment that was paying us basically a reservation fee to use some assets down there and wasn't utilizing them. It was a short-term contract with about around a little less than 12 months left.

We determined the best thing to do ultimately was to terminate the contract and give us an opportunity to utilize the assets in a better way. So for us it represented probably a better opportunity to increase our cash flows in that business..

Great, thanks for that. And, Barry, I think you ended the call with a bit of a discussion of M&A out there. I'm wondering if you might be able to expand on that a bit more. It seems like you guys have the size and the scale and the ability to take advantage of opportunities that might present themselves.

I'm wondering how close are people getting to actually selling.

Do you see more opportunities on that line in the near term, especially in the Barnett and other areas where you have a dominant position?.

M&A, Jeremy, there is a lot of things that have to line up. And I would say we start by having the right cost of capital with our investment-grade balance sheet, the right position from our asset base across different basins, so that we can look at synergy for key assets that we might be acquiring, et cetera.

What we're seeing now is a more constructive market in terms of the way buyers and sellers are viewing the value of assets. And so we're also seeing a trend where we're seeing consolidation. We think consolidation and activity leads to more activity.

So I would say, we are seeing things line up to where M&A could become a bigger contributor to our growth going forward. We started out 18 months ago really highlighting the four avenues of growth that we have.

And at that time we probably felt like that we would see a greater concentration in organic growth, which we are still seeing by the way, terrific opportunities for organic growth. But I think in this environment, we will see the lever of M&A become an increasingly important part of our view..

Great, thanks for that. That's it for me..

Thank you..

Your next question comes from Jeff Birnbaum of Wunderlich. Please go ahead. Q - Jeff Birnbaum Good morning, everyone. So, obviously it's been a difficult market and EnLink hasn’t been immune to that.

I guess my question, first question, was with the sell-off in the LP units, is there any change I guess to kind of how you're thinking about financing growth between the K&C currencies or any changes to your thinking about timing or financing and structuring of dropdowns, particularly access?.

This is Barry. Let me start and then I'm going to hand it to Mike on the financing discussion. But we would just acknowledge that we agree with your sentiment on the equity market, certainly a challenging equity market. We think in times like this everybody gets looked at as one big group.

And what we tried to do today is remind the market, remind you guys, of the way that we think we are uniquely positioned and are differentiated when you look at the overall GNP or the MLP sector. We think that we designed ourselves to be able to really take advantage of all cycles. Again I think we've demonstrated that to you today.

Our performance will continue to speak for itself as we go forward and we look forward to continuing to deliver and then ultimately the market recognizing that in differentiating, if you will, the equity valuation for us..

From a financing standpoint, we were thoughtful on this, right. So if you remember, we did our big equity offering in November of last year right before the price declined, and purposefully did our bond offering in May to ensure that we had execution.

And it also positions us like we've said, where we don't have a requirement based on our current plans to do a market equity deal. So a lot of flexibility this year to not have to be in the market and we purposefully did that. Right now from a system standpoint, we have a lot of optionality, right.

I mentioned that we have north of $60 million of cash up at ENLC and that gives us flexibility ultimately to how do we use that cash from a development standpoint. A simple way to think about it is, do you ultimately buy ENLK units because of view of where we think the value of ENLK units is.

And that jus alone based on today's distribution provide about a 10% bump in cash flows at ENLC. So things like that give us a lot of flexibility, but the big takeaway is we don't have to be in the market. That's the biggest flexibility..

Thanks, Mike, that's very helpful and just a follow-up. Kind of, Mike, you mentioned - you kind of reiterated the distribution guidance at K&C, but also kind of indicated that if we should see headwinds persist, those numbers could come down to, I think you said, 5.5% and 15.5%, respectively.

And I was wondering well effectively kind of what sort of criteria you are going to use to kind of make that determination? Obviously we're going through some challenging times right now, so maybe any color on that might be helpful..

Good question. So when you think about that, the first thing is just how we perform in the first half of the year. I mean you saw us perform. You saw the results really through the first half that we would say we're at or above where we wanted to be on an overall basis versus guidance. So the teams did a great job.

When Mac and Steve went through their businesses, it was more than a handful of projects that are really bolt-on projects that have near-term cash flows. So we have a lot of levers ultimately to continue to grow this business. So that probably is the most important thing.

When we talked about the headwinds, we are just trying to be realistic, like you said. This is a difficult commodity market and there's a lot of uncertainty on the path forward with regard to that. But from a structural standpoint, like Barry mentioned, we have a business that has, for example, floors right through the MVC.

Like I mentioned, we're at or near those floors so we don't see a lot of cash degradation in any way on that. So from a lever point of going forward, we'll continue to look on where we want to be from a coverage ratio and where we want to be from a leverage ratio and where we are from a cash flow standpoint of the business.

Most of all, we think we can continue to execute to meet the guidance we laid out..

Great. And sorry, just one housekeeping follow-up for me. I think you laid out in the release, the impact of the Cana outage in 2Q.

Can you quantify the weather impact on the Barnett or any impact that there was in Oklahoma there in the second quarter?.

It was actually negligible. We had just one compressor down for a few days and it really was no impact at all. And that was the great opportunity that we saw from our teams and how they performed..

And, Jeff, I think that is the news is that there was no significant impact given the extreme conditions that we were operating with and folks went to great extent to overcome those challenges. Great work..

Thanks, everyone..

Thank you, Jeff..

The next questions is from Sharon Lui of Wells Fargo..

Hi, good morning, everyone. Just a follow up on the question about the risks to achieving the 2015 guidance. Maybe if you could provide some color on the potential headwinds for the balance of the year.

Are there specific regions where maybe the pace of growth may be lower than what you are anticipating or is there other factors that we should be considering?.

No. I think it's what we laid out. I mean, each region has some of their own risks and opportunities. You can use North Texas as an example, we mentioned in the past we had some quicksilver exposure.

But on the flip side of that, the North Texas team working with Devon has been able to execute on the refrac and pressure reduction program to offset 25% of decline. So each area has those positives and negatives that could impact what we're seeing.

I think, like I said most of all we're just trying to be realistic because as you look at the commodity price deck today versus where was just a month ago, it has changed dramatically. So producers are still making decisions on what they're going to do from a volume standpoint.

The nice thing is we have lots of opportunities to grow the business in areas that necessarily aren't tied to commodities like Mac's business in Louisiana, which is demand based business. It’s really you have the opportunities and risks really in every area of your portfolio.

But as we said, we think as we did in the first half, we can continue executing on opportunities to offset those potential risks..

Okay, that's helpful.

And I guess if you can provide some color on the capital program to-date, how much growth CapEx is spent? And I guess just based on some of the opportunity that was highlighted how should we think about the visibility of your ‘16 and ‘17 growth CapEx program? Is there a way to quantify how much CapEx is committed at this point versus potential and still under negotiations?.

Yes, let's start with 2015 and then I'll turn it over to Barry to talk about longer term. But if you think about 2015, we had original guidance of spending somewhere around $500 million or so. A simple way to think about it is we're about halfway through that.

I think we talked about in the 10-Q about $200 million to $250 million still being in process through the latter half of the year, mainly focused on three areas. Mainly focused on the completion of the VEX project in Eagle Ford, the Cana, as Steve mentioned, and ultimately finishing up Riptide and all our work in the Permian.

So from a long-term, when I turn it over to Barry, it's really related to all the projects he worked through..

Yeah, Sharon, let me say I know it frustrates you when we don't give you specific details in ‘16 and ‘17. We would like to do that, but we really can't because we always have these large long-term projects that are in development that I outlined in detail in the call.

If you put a big number around that in the four core areas I outlined about $1.5 billion worth of opportunities that we feel good enough about to talk to you about those.

And so we aren't putting those in the capital program at this point, but across the basins we have got about $0.5 billion in the Permian, about $0.5 billion in the Mid-Continent, somewhere between $100 million and $0.5 billion Louisiana and some opportunities in the Eagle Ford. So that's only on the organic side.

I would say most of those opportunities have a construction and kind of a development period that probably is 18 to 24 months. So you really are talking about a ‘16 and ‘17 timeframe. On top of that, we have the two drop-downs that we highlighted, that would also be potential capital investment opportunities for us..

That's helpful, thank you..

This concludes our question-and-answer session. I would like to turn the conference back over to Barry Davis for closing remarks..

Yes, thank you, Kate. I appreciate, again, everyone being on the call today. We apologize a little bit for going longer than we normally would.

But we thought it was important to really give you a great feel for how we believe EnLink is a differentiated platform, how we have the opportunity to continue to deliver in all cycles and to come out of these cycles better positioned than we went in them. So thank you again for your great support.

Thank you for tuning into the call today and we look forward to reporting on our success and progress in the next quarter. Have a good day..

The conference has now concluded. Thank you for attending today's presentation. You may now disconnect..