Kate Walsh - VP, Investor Relations Barry Davis - President & CEO Michael Garberding - CFO Steve Hoppe - President, Gas Gathering, Processing & Transportation Mac Hummel - President, Natural Gas Liquids, Crude & Condensate Ben Lamb - EVP Corporate Development.

Brian Gamble - Simmons & Company Ethan Bellamy - Baird Darren Horowitz - Raymond James Robert Balsomo - FBR Tom Abrams - Morgan Stanley Brian Gamble - Simmons & Company.

Good morning and welcome to the third quarter 2016 EnLink Midstream Earnings Conference call. All participants will be in listen-only mode. [Operator Instructions]. Please note this event is being recorded. I would now like to turn the conference over to Kate Walsh. Please go ahead..

Thank you and good morning everyone. Thank you for joining us today to discuss EnLink Midstream’s third quarter 2016 results. Participating on the call today are Barry Davis, Chairman and Chief Executive Officer and Michael Garberding, President and Chief Financial Officer.

Steve Hoppe President of the Gas Gathering, Processing and Transportation Business, Mac Hummel, President of the Natural Gas Liquids, Crude and Condensate Business and Ben Lamb, Executive Vice President of Corporate Development.

As you saw, we issued our third quarter 2016 earnings release yesterday and planned to file our form 10-Q with the SEC later today. To accompany today’s call, we have posted the third quarter earnings release and the operations report to the investor relations portion of our website.

Shortly after today’s call, we will also make available a webcast replay of this call on our website. I will remind you that any statements made about our future, including our expectations 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 will 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 we made in our SEC filings, specifically those under the heading Risk Factors. The structure of today’s call will be just start with brief prepared remarks and then leave the majority of the call open for question and answer period.

With that, I would now like to hand the call over to Barry Davis..

our record results this quarter are just the beginning. We have invested $6 billion over the last 24 months positioning the company in the best basins in North America and we are strategically expanding across our core focus areas while many maintaining balance sheets strength and liquidity.

We have a focused strategy, a strong team and a strong path forward to ultimately growing distributions. With that I'll turn it over to Mike..

Thanks Barry and good morning everyone. As Barry highlighted, EnLink delivered strong results for this quarter achieving adjusted EBITDA before non-controlling interest of just over $200 million, a level achieved for the first time in EnLink’s history.

This represents sequential growth of approximately 7% when compared to the three months ended June 30th 2016. On a standalone basis, the partnership delivered adjusted EBITDA of around $198 million. While ENLC achieving cash available for distribution of $50 million for the quarter.

The partnership’s distributable cash flow was around $155 million coming in slightly above last quarter's DCF of approximately $151 million. The stable cash flows from our business generates a healthy the year to date distribution coverage ratio of around 1.04 times of ENLK and 1.07 times of ENLC.

As Barry said we are committed to maintaining our strong investment grade balance sheet and preserving ample liquidity. During the third quarter, we successfully executed on about $60 million at the market equity sales and exit the quarter with more than $1.6 billion of consolidated liquidity and a debt EBITDA of 3.75 times.

We continue to be focused on funding our growth capital which includes first installment payment of the Tall Oak purchase. Our business offers significant flexibility in how we ultimately fund this payment. As previously discussed, we could raise capital from a number of avenues including traditional funding sources.

However, our current focus has been on the potential sale of non-core assets including our interest in Howard Energy Partners. As always, we have proactively managed our balance sheet while ensuring to maintain our solid financial position anchored by our investment grade, credit rating, stronger liquidity and overall flexibility.

I will now turn the call back to Barry for concluding remarks.

Barry?.

Thank you, Mike. Before we get into Q& A, I want to highlight one of EnLink’s key differentiators, our people. I can't say enough about the talent and tenacity of the team we are fortunate enough to have at EnLink.

I am proud to come to work day in and day out and collaborate with such high quality individuals that take true pride and ownership of their responsibilities and share in the collective goal of driving the company forward, our execution and success our direct result of the people that we have here at EnLink and I am proud of it and thankful to be a part of it.

With that operator, you may open the lines for questions..

We will now begin the question and answer session. [Operator Instructions]. At this we will pause momentarily to assemble our roster. And our first question will come from Brian Gamble of Simmons & Company..

Good morning, Brian..

maybe on midcon you are talking about, obvious Chisholm, one being upgraded Chisholm II and the works, Barry you mentioned essentially Chisholm III and Chisholm IV, it will clearly the Devon update last night is a huge positive as our others in the basin, maybe you could roll it altogether for us talk a little bit about the Tall Oak assets and the $300 million that we've heard about previously from incremental EBITDA standpoint is Chisholm III get us there, Chisholm IV get us there, it’s the upside to that number, maybe just walk us through some of the individual pieces as you see it and then the timing around some of those potential decisions may be to start with Chisholm III from a decision soon point..

Brian, its Ben Lamb. First, great question and I could take the entire Q&A time talking about this. There were a lot of parts to that question but let me give you the big picture. The big picture is everything is going the right way. I think that if not all then very nearly all of our producer customers raise their type curves in the last quarter.

Devon announcing there’s last night that you will also saw Marathon new field do likewise earlier in the quarter.

We have seen really encouraging results from down spacing tests and from test of multiple productive horizons within Merrimac what we haven't seen yet but I think we'll see next year, the beginning of this drilling efficiencies as full transition from delineation into full field development, I think we'll see greater rig efficiency and what that translates into as you point out is significant volume growth.

Just as a marker in time when we acquired the Tall Oak assets, the volume on those assets was about 70 million a day as of this morning, as of this morning, it’s about 185 million a day and that's all occurred obviously in not a nine month or ten month period here.

As far as looking forward, our decision points on expanding capacity really have everything to do with the producer customers and their plans.

From where we are today, I could see us moving forward with another plant in the fairly near term and then the decision on the plant to follow that would be dependent upon the level of activity that we see next year.

In terms of our level of confidence in achieving the $300 million by 2018 we laid out at the time of the acquisition we remain very confident in achieving that number. I think the most important thing for you and everyone to watch in assessing whether we remain on track is something to recount.

Today we have 11 rigs working on our dedicated acreage in the midcontinent. We've got into or 12 or so at the end of the year and that range of 12 rigs or so is what we need to see on a sustained basis in 2017 and 2018 to deliver on that number.

One other thing that I would say, a highlight for you is we've got a lot of work this year to interconnect all three processing complexes in central [indiscernible] we have 400 million cubic feet a day capacity, Chisholm II where today we have 120 going to 320 early next year and that average we have 75 million a day of capacity.

That's all done and so it becomes increasingly difficult to differentiate between the assets we acquired and our legacy assets.

I think we need to start focusing on the big picture in central Oklahoma and as Barry said his prepared remarks, the big picture is 800 million cubic feet a day of processing capacity soon with lots of sites to add even more. .

Hi Ben, I appreciate that. And then maybe on the flip side of that, obviously we want to go loud how we're going to pay for it. Mike, can you walk us through some of the options that you mentioned, obviously traditional capital, would be preferred if that were an efficient use of the market.

You mentioned non-core asset sales, we all know about how we're maybe anything else to put in that bucket that we can think about, you just have a lot of pieces to work with all corn one way or another but what's on the periphery at this point..

Yes, it’s a good question, Brian. So when we think about our funding we think about just being consistent with how we've done things today.

And if you look at sort of the scorecard of that you know a couple of points would be, we've raised about $1.2 billion in equity in 2016, if you look from a balance sheet standpoint we've really been between 3.5 to 4 times from a leverage all during that time with the commodities backdrop we have seen.

We've had distribution coverage ratio, one or above during that whole time In that same playbook is what we plan to use in 2017 is looking at all the avenues you mentioned, we did say there is a preference and a focus right now on not core asset sales and that's something we're pushing hard on.

Howard is one we've mentioned and we will continue to work toward and we believe that that is going to be a piece of the solution. We did have a good quarter also on the equity of about 60 million and that's something we've seen better strength and better capability to execute as this year has gone on.

So it's going to be a combination of all that and we have the nice thing is we have all of those levers to execute on but we're going to be intentional on that. We're going to continue to manage the balance sheet the same way we manage the balance sheet in 2016..

Other pieces to the non-core potential sales that would be as meaningful if not more meaningful than Howard or those smaller single and double type things?.

I would say it's more of the latter, this is what it is..

Great. I appreciate that guys..

Thank you, Brian..

And our next question will come from Ethan Bellamy of Baird..

Good morning. You've got a $30 million potential swing in fourth quarter EBITDA from the revised guidance.

But can you tell us what are the biggest drivers of that range potentially?.

Yes, so when you when you think about it, one we feel great on how the business has performed this year. If you look where we started and what we've done over that time we feel we're in a great position.

Where we came out with this quarter is to give you guys better guidance and how we think about the business today which is really in the range of that 760 or 790 for the year based on how the business is perform today.

I think the key for you to hear is that we're confident that we're going to execute on that top end or the upper end of that range and that's where we think we're going to be ultimately as we go through these final months of the year.

So a big thing for us is how our business has performed on all sides whether it's the gross margin or whether it's the OpEx..

That’s helpful and then just one quick one on Howard. Could you remind us, do you have a row for or tag along rights or what are the features of your investment there if any that matter in terms of how you would dispose of that..

Yes, Ethan, this is Barry. We are not going to get into the details of what we have with our partners there. I just think that there are certain things there that we're working through but we feel really good about our ability to transact on that if we find the right situation..

Okay, that's helpful.

And then one last one on Oklahoma, what are you hearing at the field level on induced misery from water disposal and has that so far impacted any of your customer's drilling plans and do you think that in any way going to be governing or updating factor on SCOOP and STOCK development?.

Ethan, its Ben. At this point we don't see, there has been a governing factor on SCOOP and STOCK development.

Where the industry has had some issues is more to the northeast as you get into a more traditional Mississippian Lime target where water cuts maybe nine or ten barrels of water per barrel of oil, the water cuts in the STACK or nothing like that.

So while certainly the producers do have to handle the water they don't make the same challenges and where the seismic events have occurred is generally away from the core of this SCOOP and the STACK..

Thank you, Ben. Thanks, Barry..

And our next question will come from Darren Horowitz of Raymond James..

Good morning guys. Ben, a question for you, just thinking about the downstream opportunity, with regard to the volumes out of the tailgate of that processing plant build out.

How do you think about not just getting the incremental Y grade down into Louisiana system indicate but also maybe opportunities for residue gas and ultimately from a CapEx perspective, what is that opportunity set look like to you?.

Darren, its Barry. I'll start and I'll ask Mac to add on particularly as it relates to NGLs. What it means is an ocean of NGLs pointed toward Max business over the next few years and we're trying to position ourselves in a way that Mac and NGL team to take full advantage of the liquid that we are going to control out of the area.

Initially at least where we used third party infrastructure to move between Basins so from Oklahoma town to the Gulf Coast and it will pick up our own Cajun-Sibon system into the Louisiana. Our residue, we have not been active recently and working a residue solution.

Our variation on a residue solution is a project you've heard about before that’s Oklahoma Express which would be a rich gas line to move the gas from Oklahoma to north Texas for processing that remains an option plus we think a very good option that is quick to execute relative to a large scale work regulated residue pipeline and will be one of the things that we consider as we think about future processing expansions in Oklahoma as an option..

Darren, its Mike. I'll just follow up a little bit on the NGL piece related to Oklahoma and really just to ride with what Bean said there. We see that the Oklahoma growth benefiting our NGL business very significantly.

We have talked in our information today, we're currently below capacity on our Cajun-Sibon system, with the expectations of getting the capacity as Oklahoma processing facilities come on and those NGLs are made available to our system.

As we see future growth in our NGL Oklahoma will certainly see the opportunity for us to look at other opportunities for us to expand on the NGL side of the business, whether that's within the state of Louisiana or whether that's in the state of Texas for instance or possibly even in Oklahoma.

So we think it gives an opportunity to look at a pallet of potential that we simply wouldn't be able to look at without that kind of growth upstream in our gas business..

Mac, from your perspective, does the incremental volume addition coming from a lot of that central Oklahoma Y-grade, does it ramp to such an extent that you think it could backstop, if not just additional frac capacity opportunities but also maybe backstop.

Some supply assurance for LPG or even purity product export?.

I will say, I'll answer that is yes but I think it's also an opportunity for us to look at other options like for instance five points which is something that you didn't mention. So the full suite of NGL or CapEx or NGL investment opportunities that you can imagine, I think are in front of us with this kind of growth potential in our business..

Thank you..

Thank you..

[Operator instructions] And our next question will come from Robert Balsomo of FBR. .

I wonder if you just give us a little more clarity on the crude and condensate segment, you know expectation obviously volumes down again but margins remaining relatively flat, how to think about that into the year and in 2017?.

Yes, the way I look at our crude business is with a lot of excitement.

As I was I think about even a recent milestone that we've had today and that is that we've introduced first oil in our Chickadee gathering system which we announced earlier this summer, that's a great example of us taking the position that we entered the Permian with which is the LPC business and using that as a platform to grow our crude business elsewhere in the Permian, we wouldn’t have had that opportunity to build the Chickadee project without LPC.

That's really facilitated that the growth potential that we see behind chickadee. As I mentioned, we've already introduced first oil into as of really last night and today we see continued commercial excitement around the assets. In fact we expect to sign more agreements this week that add acreage volume and additional customers to that project.

We've got three rigs active in that area right now going to four by the end of the year. So as said here today and I look out into our crude business in the fourth quarter and beyond my expectation is that we're going to be successful on growing that business. And again I think that the proof is in what we're seeing today..

Where there any changes to operating expenses for the legacy assets in that segment?.

Yes there was, Robert.

In this downturn in volumes we've been very aggressive in terms of not only how we acquire new volumes or stave off the decline of the existing volumes but we've also been very aggressive in terms of how we manage the cost and I would say that that's something you've seen across EnLink, it's not specific to the crude business but certainly in the crude business as we've seen volumes decrease.

We have been very aggressive in terms of managing the cost associated with providing service to our customers. While at the same time, making sure that the level of service to those customers does not suffer..

Barry, thanks. That’s it from me..

Thank you, Robert..

And the next question will come from Tom Abrams of Morgan Stanley..

Thanks. Good morning, last remaining question, slow it for me, when precisely is the first quarter ’17 payment in 2015 or so have to be made.

Is it end of quarter, beginning of quarter?.

Yes, this is Mike. I think it’s January in January..

January, okay. So I guess that gave sense of how much time we have left to come up with a solution. Thanks a lot..

This is Mike. I'll follow on a little bit is part of the solution we have continue to work toward that solution, we don't they were in a situation where we have to find a solution.

We work every day on that whether that working toward Howard whether that's issuing additional ATM equity whether that was debt raise we did earlier we done all those things working toward that. So we don't feel that we have one solution to solve that is a continuation of how we've been solving and working toward funding our capital..

Great thanks a lot..

And next we have a follow up question from Brian Gamble of Simmons & Company..

Alright, that’s good you guys have more stuff. This is fun. Okay, how about Devon on the Barnett discussion, you mentioned they continue to evaluate Basin operations, there ops reports clearly was, Midland, Delaware Mid-con, heavy.

What are they saying about the Barnett, what kind of discussions have you had in regards to where their CapEx falls in the Barnett kind of from an order of magnitude or order of importance standpoint for next year, just kind of want to get a handle on around, exactly what type of opportunity that presents and you want you can juxtapose that against all the good work you guys have been doing so far to mitigate the degradation there on their own..

Brian, this is Steve and I think you laid that out pretty well.

Devon is continuing to look the Barnett in its portfolio and where it fits and over the last year, they've done some re-fracking, we had about 17 wells refractor early ’16 and I think that the key driver that they mention is around gas price and we continue to be optimistic that that'll drive some development but the other thing that we're doing with them is we are very focused on optimizing our operations.

We are reducing pressures in the system that's resulting in an uplift in volume form. Just recently we completed some projects and saw about a 10 million to 15 million a day uplift from pressure reduction. We are continuing to become more efficient in our operations.

I think you saw in their operating report pretty significant reductions in the down-time. Our assets are running well over 99% of up time operations. So we're very much in line with Devon about optimizing the value of that asset and we're continuing to work with them and identifying opportunities not just for re-fracks but also new drilling locations.

So I think it's a very positive story, I think it's just a question as Devon states that they are waiting and looking at the opportunities that the price environments going to provide to them..

This is Barry. Let me just emphasize, I think Steve gave a great answer but I want to make sure that folks have heard about Barnett if you've heard the highlight which are we've turned 10% to 12% inherent decline into a 5% to 7% for this year through the operational adjustments that we've made in the work we've done with Devon.

I hope you're here in that operational excellence in a mature basin. Secondly our cost reduction in that area have been significant. Our team has done an outstanding job. Thirdly, the consolidation is happening.

We are active in several conversations that would lead to us being the consolidator of a mature basin in which will allow us to continue to make cost reductions and really maximize cash flow from the area and lastly the asset sales the transactions that we're seeing there, I think we are going to end up with acreage in the hands of folks who really want to develop this and maybe don't have other places to invest capital.

So the Barnett, I believe has been optimistic future and we feel good about that..

Good job on the optimization work.

Clearly this year and I don't want to front run 2017 possibilities clearly so there's some moving pieces that could be short term in nature but as far as the efficiencies on your end that trend from last year to this year, are we reaching the latter stages of those on a standalone basis or are there, I guess additional efficiencies to be weaned without considerations of new contracts or consolidation that that might even make that degradation rate lower in ’17..

We're working on that today and we don't have any guidance for ’17 yet. We should probably have that when we go to the next call but we're continuing to look at opportunities whether or not we're at the end I can't say for sure because I continue to be surprised at the things that our teams come up with.

So I'm going to remain optimistic that that they're going to continue to deliver the results like Barry talked about and that we're going to say some pretty positive things that they're going to come up with in 2017 as well..

Brian, I think the question that you asked really gives me an opportunity to highlight just the execution and the diligence by our team, look at all of the content of this call and the answers to our question what you hear over and over is on budget, on time and in most cases it's actually ahead of time, starting up with a greater Chickadee last night, startup of the rowboat plant earlier this week, we would probably go through more than a dozen significant projects in Oklahoma that are on time on budget.

Our team is executing with excellence right and this is one of the highest growth period we've ever seen. So really want to applaud the efforts of all of the EnLink folks..

I appreciate that Barry, thanks guys..

Thank you, Brian..

[Operator Instructions] I am showing no additional questions, I would like to conclude the question and answer session. I would like to turn the conference back over to Barry Davis for any closing remarks..

Thank you, Laura and thank you to all that have joined on today's call. We look forward to updating you on 2016 yearend results in February and with our full two 2017 outlook with you then have a great day and again thank you for being on the call..

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