Energy Transfer LP (ET) Q3 2017 Earnings Report, Transcript and Summary

Welcome to the Enable Midstream Partners Third Quarter 2017 Earnings Conference Call and Webcast [Operator Instructions]. It is now my pleasure to turn the floor over to Enable's Senior Director of Investor Relations, Mr. Matt Beasley. Sir, you may begin.

Thank you, and good morning, everyone. Presenting on this morning's call are Rod Sailor, our President and CEO; and John Laws, our Chief Financial Officer. We also have other members of the management team in the room today to answer your questions. Earlier this morning, we issued our earnings press release and filed our Form 10-Q filing with the SEC. Our earnings press release, Form 10-Q filing and the presentation that accompanies this call are all available in the Investor Relations section of our website. We will also be posting a replay of today's call to the website. Today's discussion will include forward-looking statements within the meaning of the securities laws. Actual results could differ materially from our projections and the discussion of factors that could cause actual results to differ from projections can be found in our SEC filings. We will also be referencing non-GAAP financial measures on today's call, which we have reconciled to the nearest GAAP measures in the appendix of today's presentation. We invite you to review the disclaimers in this presentation for both forward-looking statements and non-GAAP financial measures. With that, we'll get started and I'll turn the call over to Rod Sailor.

Thanks, Matt. Good morning, and thank you for joining us for our third quarter call. Enable had another quarter of solid performance. Natural gas gathered, processed and transported volumes as well as crude gathered volumes all increased in the quarter compared to the third quarter of 2016. The increased volumes contributed to higher total revenues and gross margin in the quarter compared to the third quarter of 2016. Enable today announced a third quarter 2017 cash distribution of $0.318 per unit on all outstanding common units and a third quarter cash distribution of $0.6250 per unit on the partnership's Series A Preferred Units. The common distribution and the Series A Preferred distribution remain unchanged from the previous quarter. Enable also recently completed the acquisition of Align Midstream, an acquisition that adds assets and acreage dedications in the Haynesville and Cotton Valley plays. It is a great fit for Enable's existing Ark-La-Tex Basin footprint. We will provide additional details on the transaction later in the call. Turning to the next slide, Enable remains a market leader in the SCOOP and STACK plays in the Anadarko Basin. Our significant investment in the basin has created substantial scale and operating leverage. Our previously announced Wildcat project is on schedule, and we anticipate Wildcat will be in service in the second quarter of 2018. As we have discussed before, this project is a timely, capital-efficient and creative solution to support volume growth in the basin. It will add to our market-leading processing capacity by providing an additional 400 million cubic feet per day of processing capacity with access to the Texas interstate natural gas markets. As you can see on the next slide, the Ark-La-Tex Basin is experiencing significant growth driven by lower costs, longer laterals and advanced completion techniques. We have seen producers quote PV10 breakevens in the Haynesville at natural gas prices as low as a $1.80 and IRRs for the Cotton Valley wells of almost 70% at $3 natural gas. Our gathered volumes in this basin have grown for 7 consecutive quarters and we saw a volume increase of almost 30% from the second quarter to the third quarter of this year. Forecasts continue to point to production growth in the basin, and our assets are in a great position to support this growth. Our long-term view of the Ark-La-Tex and our significant position in the basin were key factors in our decision to acquire Align Midstream. As you can see on the next slide, Align's assets are a great fit with our existing footprint and further extend our reach and acreage dedications in the active areas of the basin. The acquired assets include a 190 miles of natural gas gathering pipelines, 100 million cubic feet per day of natural gas processing capacity and approximately 100,000 gross acres of dedication. There are currently 2 rigs drilling wells contractually dedicated to enable on this acreage. The integration of these assets will allow us to optimize our midstream platform in the basin and will give us the ability to offer our customers an expanded suite of midstream services. We expect the acquisition of Align Midstream assets and our subsequent investments to equate to a 2018 of adjusted EBITDA multiple of approximately 10x and we expect that multiple to work down to below 7x by 2020. Moving to the next slide. Our transportation and storage segment continues to provide significant fee-based margin. As you can see from the map, our pipelines are well positioned to support natural gas demand growth in the Mid-Continent, Gulf Coast and Southeast regions. Our EGT pipeline serves utilities, end users and producers in the Anadarko, Ark-La-Tex and Arkoma Basins. In 2017, EGT had several contract expirations on its Line CP segment between Carthage, Texas and Perryville, Louisiana. In 2018, there are no contracts expiring on Line CP and the pipeline will add 205,000 dekatherms per day of contracted firm transportation capacity in the Anadarko Basin to the CaSE project, which is still expected to be fully in service by the fourth quarter of 2018. Our MRT pipeline has a long history of providing local distribution companies and industrial markets in the St. Louis area with access to key Mid-Continent and Northeast supply at competitive rates. Our planed 2018 rate case provides us the opportunity to adjust rates based on historical investments and updated contracted capacity levels. Our EOIT Intrastate system interconnects natural gas supply with the Anadarko and Arkoma Basins to Enable's EGT System and 12 third-party natural gas pipelines. Quarterly average deliveries on the system reached an all-time high for the partnership in the third quarter as a result of significant production growth in the Anadarko Basin. In 2018, our Muskogee project will provide an additional 228,000 dekatherms per day of firm contracted transportation service for Oklahoma Gas and Electric by the end of the year. Finally, the SESH pipeline is a 50% joint venture that serves customers that generate electricity for the Florida power market and provides Florida with diversity of supply from 20 third-party pipeline interconnects with access to the southeast and northeast markets. Turning to the next slide. Enable continues to demonstrate a commitment to long-term value creation with commercial momentum underpinned by strategically located assets, a focus on disciplined growth and a strong balance sheet. Our commercial successes include growing natural gas gathered volumes for 7 consecutive quarters; contracting significant long-term fee-based projects with the Wildcat, CaSE and Muskogee projects; and increasing our scale and operating leverage in the Ark-La-Tex Basin with the Align Midstream acquisition. The third quarter marked the partnership's highest quarter for natural gas gathered volumes, crude oil gathered volumes and intrastate transportation average deliveries. This quarter was also the partnership's strongest year-to-date third quarter performance for adjusted EBITDA and distributable cash flow. As we continue to serve the significant supply and market demand in and around our footprint, we remain focused on financially disciplined growth. Historical investments in infrastructure have created significant scale, and we have the ability to leverage this scale to connect new volumes in a capital-efficient manner. We have followed a disciplined approach to M&A and we have also seen an improvement in O&M and G&A expenses as a percentage of gross margin. Our balance sheet remains strong with investment-grade credit metrics, significant liquidity under our $1.75 billion revolving credit facility and year-to-date retained distributable cash flow that equates to more than half of our year-to-date expansion capital spending. We also remain focused on improving our cash returns on invested capital including optimizing our current assets and only deploying capital when it will build long-term value for our investors. We'd now like to turn the call over to John to further discuss our third quarter operational and financial results as well as our 2018 outlook.

Thank you, Rod, and good morning, everyone. I will cover a few of our key operational and financial metrics for the quarter. As always, a more detailed and comprehensive overview can be found in our third quarter earnings release and in our 10-Q, both of which were released earlier this morning. Turning to Slide 11. The drilling and completion activity of our customers drove an 11% increase in natural gas gathered volumes and a 7% increase in natural gas processed volumes in the third quarter of 2017 compared to the third quarter of 2016. The increase in natural gas gathered and processed volumes was primarily driven by higher natural gas volumes on our systems in both the Anadarko and Ark-La-Tex Basins. We also saw increases in our crude oil gathered volumes in the third quarter of 2017 compared to the third quarter of 2016 as a result of several multi-well pads coming online on our Williston Basin gathering systems. Wrapping up the operational statistics in the G&P segment. Enable's customers continued to maintain a strong level of rig activity with 40 rigs drilling wells dedicated to our gathering and processing systems, comprised of 30 rigs in the Anadarko Basin, 8 rigs in the Ark-La-Tex Basin and 1 rig each in the Arkoma and Williston Basins. In terms of increases in our transportation of storage segment, our overall transportation volumes were up driven primarily by increased average deliveries on our intrastate pipeline system in Oklahoma, which was primarily a result of increased supply from the Anadarko Basin. Turning to the financial results for the quarter. Net income attributable to common units was $104 million for the third quarter, a decrease of $6 million compared to the third quarter of 2016. The decrease in net income attributable to common units was primarily due to higher O&M and G&A, depreciation and amortization and interest expense. O&M and G&A expenses were higher primarily due to a reduction in capitalized overhead costs. Depreciation and amortization was higher primarily as a result of the additional assets placed in service while interest expense was up primarily due to higher interest rates on outstanding debt. The decrease in net income attribute to common units was partially offset by higher gross margin and the absence of asset impairments in the third quarter of 2017, of which, there were $8 million in the third quarter of 2016. Adjusted EBITDA was $250 million for the third quarter of 2017, an increase of $6 million compared to the third quarter of 2016. The increase in adjusted EBITDA was primarily a result of higher gross margin after adjusting for $14 million of noncash changes in the fair value of derivatives reported in revenues, partially offset by higher O&M and G&A expenses. Distributable cash flow was $187 million for the third quarter of 2017, a decrease of $2 million compared to the third quarter of 2016. The decrease in distributable cash flow was primarily due to the higher adjusted EBITDA being offset by higher adjusted interest expense, which was driven by higher interest rates on outstanding debt. After considering the distributions declared for the quarter, Enable generated an impressive distribution coverage ratio of 1.36x for the quarter and 1.25x for the year-to-date period. Moving to the next slide. Enable ended the quarter with significant liquidity under our revolver and a total debt-to-adjusted EBITDA metric of 3.47x. Our credit profile continues to be supportive by the volumetric growth associated with our franchise position in the Anadarko Basin, significant contributions from fee-based firm and minimum volume commitment contracts in both of our business segments and our employees' focus on deploying financial resources efficiently. Finally, before I provide our outlook for 2018, I would like to make a few comments about our expectations for 2017. With our year-to-date performance and our expectations for the balance of the year, we now expect that we will be at or above the upper end of the range of our previously issued 2017 outlook for adjusted EBITDA and distributable cash flow. We continue to expect that we will exceed the midpoint of our previously issued 2017 outlook for net income attributable to common units and be at or below our previously issued expansion capital outlook when excluding the acquisition of Align Midstream. For previously issued 2017 outlook and associated non-GAAP reconciliations, please refer to Enable's first quarter 2017 earnings press release and presentation. Turning ahead to 2018. I will start with the outlook for our key operational metrics. As a result of our expectations for continued producer activity in the STACK, SCOOP, Haynesville and Cotton Valley plays, we expect our 2018 natural gas gathered volumes to be between 3.9 and 4.6 TBtu per day and our 2018 natural gas processed volumes to be between 2.3 and 2.8 TBtu per day. In the Williston Basin, we expect our crude oil gathered volumes to be between 34,000 and 40,000 barrels per day as a result of continued multi-well pad drilling and improved well results. We also expect our 2018 interstate firm contracted capacity to be between 5.4 and 5.8 billion cubic feet per day, this is a decrease over 2017 primarily due to the full year impact of the 2017 contract expirations on Line CP. In terms of expansion capital for 2018. We estimate the capital expenditures in the gathering and processing segment to be between $330 million and $460 million, which will be driven primarily by project Wildcat, gathering and compression infrastructure in the Anadarko Basin as well as the capital to tie in the acquired Align assets with our existing systems. As a reminder and as we have demonstrated in years past, Enable has the ability to optimize gathering and compression infrastructure expenditures in accordance with producer activity levels. As it relates to the transportation and storage segment, we estimate 2018 expansion capital expenditures to be between $120 million and $140 million. The 2018 expansion capital spend for the segment is primarily comprised of capital for the CaSE project and the expansion of our EOIT system to serve OG&E's Muskogee plant. When considering the named projects under construction and our expectations for growth and gathered volumes, we expect our net income attributable to common units to be between $355 million and $435 million. Additionally, we expect our adjusted EBITDA to be between $945 million and $1.025 billion. We expect to generate between $650 million and $710 million of DCF while maintaining a distribution coverage ratio between 1.1 and 1.25x and a total debt-to-adjusted EBITDA target of plus or minus 4x. Our 2018 financial outlook is underpinned by a gross margin profile that is expected to be approximately 92% fee based or hedged and our commodity price sensitivities are shown on the next slide. As you can see, our 2018 DCF outlook provides substantial distribution coverage at our current level of distributions. As Rod mentioned in his remarks, we have funded significant portions of our expansion capital program with retained DCF. As we moved into 2018, we will look to fund a part of our capital program with retained DCF and we will make any distribution growth decisions based on maximizing value for our investors. That concludes my remarks. We will now open the call up for your questions.

[Operator Instructions]. Our first question will come from Jeremy Tonet with JPMorgan.

Would just want to touch base on some of your last comments there in thinking about distribution growth in just if you could think more about your philosophy as far as expanding coverage versus growth and how you see kind of the market evolving in more of a pivot towards self-funding, less capital market reliance, which seems like Enable has been able to move into that direction. Just wondering if you could add a bit more of your thought.

Yes, this is Rod. I can start and then John can wrap that up but again, I think as we said a couple of times on the call, again we're very excited about what 2018 looks like. We do anticipate earning a significant distribution coverage. Our intent right now is to put that money back into the company. Again, as you know, the markets are a little bit in flux. We think the best use of that cash for our investors again is to use it to fund our growth capital and we'll continue to evaluate, I think, as we approach that 1.25x. We constantly think about the distribution and at what level it should be and when we should increase distribution levels, but I think right now our thinking is, let's continue to stick to our knitting. Let's focus on deploying capital efficiently. Let's deploy -- let's think about maintaining some cost discipline and try to build some coverage and maintain a strong balance sheet. John, do you have anything else to add?

No, I think well said.

Great. And just wanted to touch base on a line a bit more here, and I was wondering if you could expand upon the synergies that you, guys, see really bringing that multiple down over the next few years. If you could elaborate a bit more there, that'd be helpful.

Well, again, I'll start that and either John or Craig can jump in. But again, it is very close to our system as we demonstrated on the map. We see significant ramp of activity. Once we hook it into the Enable system, we'll have the ability to move volumes on that system, optimize where we process that gas. It will save us in the long run on -- both on capital and I think be able to serve our customers with some additional products by -- again, by moving that up into our system.

Got you. So there could be some elements to kind of downstream leverage there as far as connecting the value chain and extracting more value that way, it sounds like?

Absolutely, yes.

Great. And then it seems like Ark-La-Tex volume ticked up there. Align wasn't included yet in the quarter, was it? Could you talk a bit more about that?

No, it's not. It's not in the quarter. Again, we continue to be really very pleased with the activity in the Haynesville along our system. Again, we continue to see the new producers on that system continue to deploy capital very good -- we're seeing very good well results. We continue to see volumes grow on that -- in that area. I think, we've had I think like 7 consecutive quarters of growth on our system in the Haynesville. Does that get to your question?

Yes, that's helpful. And maybe just, if I could, on guidance here for 2018, if you could provide a bit more color on what could drive the upper end versus the lower end of the range there. What are the key variables you're going to be monitoring?

And you're speaking just with respect to the volumes in the Ark-La-Tex?

More EBITDA there in general for the company as a whole for 2018 EBITDA guide.

Sure. I think, Jeremy, it's going to be more of what's been the story for us through 2017. And so if you think about where we've got opportunity to exceed, it's going to be through increased levels of activity. On the one hand -- on the other hand, if some of what we're seeing as we go through the balance of 2017 is a trend, that could certainly continue on into 2018 and that's greater density, so it's not necessarily just the rig activity but it's what the rigs are doing. I mean, as we think about these rigs drilling more multi-well pads and some of the early instances that we've seen on our system, we're seeing increased productivity for each well on those pads. So I think producers continue to do a great job at refining their process and those are some of the things that, as we look at from where we sit today, from what we could see as driving the upper end of that, it's certainly increased activity levels as well as increased well performance, which we think the producer community is certainly demonstrating.

That's helpful. And just one last one, if I could. I don't know if there's anything really more you can add here. But just with regards to CenterPoint and their decision on how they're going to proceed forward there, their holdings, is there anything more that you can share or what's the way of thought there?

Yes, there really isn't anything we can share. There isn't really an update we can give. It's not an update that we're really privy to. Again, I think they will probably make or we anticipate they will make some remarks on their call, which I believe is Friday. But I'd love to give you more color, but really don't have anything to add to what we've said previously.

We'll take our next question from Christopher Tillett with Barclays.

Just quickly in the G&P segment, you provided a little bit of commentary in your press release around some of the drivers and the improvement there period-over-period. But I was just wondering if maybe you might be a little bit deeper, really kind of any insight you could give there just in terms of how much of it was commodity based or you mentioned some higher fees in some of the basins as well. Just any insight would be helpful.

Well, I can start and don't forget we restructured a contract last year in the STACK area and we said that we would be deploying a lot of capital this year behind that contract and that really was a fixed fee contract, so little commodity exposure there. John raised, I think, a great point on the last call around we've just continued to see excellent well performance from our customers. We've seen increased density. And again, I think we've been surprised a little to the upside by some of the well performance. And as we have said for, I think, probably the last 18 months, we're very well positioned to deploy capital. We have a significant footprint that's allowed us, again, to hook up some of these larger pads with minimal capital deployment. And so I think it's a combination of efficient use of capital. It's again proximity to our footprint and it's really very good, very strong well performance

[Operator Instructions]. We'll take our next question from Nick Raza with Citi.

Just a couple of follow-up questions. In terms of just the pipeline growth or revenue opportunity there, understanding that volumes are contracting on Line CP has sort of come off. What do you guys expect in sort of the near term?

Well again, we've kind of done what recontracting we anticipate on Line CP. We don't expect anymore more contract roll-offs. We've been able to -- in '18 roll around the fall-off on the rig contracting there. As we've talked, we've got other projects coming online and we see significant growth on -- coming out of the Anadarko transportation growth on the system. Our project, Wildcat, well, again, really more a G&P. Coming in through the G&P section is really the transportation project. So again, I think we're very pleased with what we anticipate will be pipeline results in 2018. But again, we're not anticipating a significant turnbacks in '18 from contracts. Not a lot of recontracting risks in 2018. We took the hit this year on Line CP and really all of that is factored into 2018 guidance. So Craig, I don't know if you have anything else you could add there.

No, and I think we have taken on -- and this is Craig, by the way. On Line CP, we have seen the roll-offs in this year and right now we do see it as an opportunity to see some more -- to see volumes come back on. And as Rod and John had both said, we're seeing a lot of activity in the Haynesville. Those numbers are obviously picking up. And we see Line CP as well positioned for the future there.

And again, that's upside that we haven't factored into the guidance forecast.

Okay, that's helpful. And then just any sort of updates on the MRT rate system -- or the rate case, excuse me?

Yes, not really anything we can say to that, that we haven't already said. Again, we continue to be -- they continue to be a good customer for us. We continue to work with them. We really don't know yet what kind of turnback to anticipate, and again, we'll be going into a new rate filing in 2018 and would look to recover any lost revenue there. So that's really about all we can say.

Okay. And I'm sorry, but just a quick follow-up on one of Rod's comments earlier. You mentioned the strong balance sheet in 2018 and you're going to essentially use excess coverage. In terms of just the metric that we should think about, do you have one in mind in terms of debt-to-EBITDA.

Yes, debt-to-EBITDA, yes, it's plus or minus 4x. So that's consistent with what we've been talking about in the past. Clearly, coming out of this quarter being, again, just beneath 3.5x, we've got some room there to accommodate the Align acquisition. We are expecting some EBITDA growth, which will generate some additional leverage capacity. But plus or minus 4x is what we contemplate for leverage there.

Okay. And I mean, is there contemplation to maybe it's not to increased distributions, but to potentially approach buying back preferreds from CenterPoint?

Not specifically contemplated in our guidance.

[Operator Instructions]. We'll take our next question from Ned Baramov with Wells Fargo.

So following up on the earlier discussion regarding distribution growth and funding CapEx with distributable cash flow. Do you have a goal of getting to a point where the partnership is self-funded from an equity perspective?

Look, I think, that's a fantastic place to find yourself in. I think where we sit today we really are enjoying the benefits of the work that's been done by the company over the last 18 to 24 months. That's put us in a position to have the flexibility that we have today, frankly, in order to be able to fund the level of capital -- expansion capital, that is, that we've been able to fund at over 50%, we've effectively funded the equity portion of our expansion capital this year. I think we'll continue to make strong strides towards funding meaningful portions of our expansion capital in 2018 and beyond. But as we also said, we'll be managing coverage to a responsible level in something that we think is appropriate. And look, just where we are today, having the flexibility and the comfort that we have around coverage and leverage is a position that we're enjoying at the moment.

Okay. And then a quick question on the economics of the Align transaction. So I think you -- in the slides, you mentioned a multiple of 10x, which is expected to decline to 7x by 2020. You noted subsequent investments are required to get to that lower multiple. So could you maybe quantify the CapEx budget needed to achieve this higher return?

We probably won't get into it specifically. Again, in the grand scheme of things, the capital that we're spending on Align is not going to be a significant driver for us in 2018. There is some capital that we're going to incur for tying in that system with our existing system and we expect growth. So we'll have some additional costs for well connects and things along those lines. But it's not anything that's going to be a material move from what you see or what you would otherwise expect to be embedded in our overall capital guidance. So that 10x plus or minus off the purchase price with some marginal capital is all you ought to be thinking about there.

Okay, got it. And then another one on expansion CapEx. So I think year-to-date spending implies a significant ramp in the fourth quarter. You did note that probably expansion CapEx is going to come in below the midpoint of your 2017 guidance. I guess, is this driven by some of that CapEx previously expected in 2017 now going into the 2018 budget?

There could be some of that, that slides over. But really, the performance in 2017, as you think about it and you look at the expanse of our systems primarily across the Anadarko where we've got a lot of the new activities and stronger well performance, it's really just the team at Enable in our operations areas and otherwise in ensuring and informing us in terms of what is the best and most appropriate way to utilize that system. And so we've also had and been able to enjoy some benefits out of optimizing our compression and new compression spend. And it's really about the focus on optimization and return on our existing capital invested that's really kind of gone deep into the company and allowed us to frankly avoid capital and not think about so much of a shift.

We'll take our next question from Phillip Pennell with USAA.

I guess, the only one I have with regard to kind of what you were talking about at Haynesville, and given the moving parts that you guys had, the moving parts that Enbridge has. I mean, what are you thinking long term in terms of southeast supply because you've got Hillabee coming online. People talk about demand for gas out of Florida, but they're also ramping up renewables. I'm wondering how SESH kind of fits into your overall Haynesville expansion distribution going forward and also the Align acquisition.

This is Craig. I think SESH is a very important takeaway part for us. It does a great job of feeding the southeast markets. It runs at its very high utilization rate. So we have enjoyed the investment in SESH and that continues to be an integral part of our pipeline system. It does tie into our Line CP. It does provide takeaway capacity from that Haynesville area. But as far as the total ramp-up, we continue to look at the markets for that Haynesville gas and how to best situate our pipeline system to ensure that, that gas gets to the best market. I'm not sure if that completely answers your question.

I think, this is Rod, just to add, I think we also see the activity in the Haynesville as it relates to our system. Also we think, as Craig mentioned on an earlier question, it also situates very well for Line CP and potentially to move some volumes there. So again, I think we're excited about the Haynesville for a number of reasons. Again, we've seen a lot of volume growth underneath the MVCs that we have with volume in GeoSouthern, but we also see opportunities again down the Cotton Valley play where we've made the Align acquisition. That is an area that continues to see an uptick in activity. We're benefiting from that already and we think it opens up some opportunities for our pipe system down there.

And I guess, just, Phillip, just to make sure that we're appreciating the extent of your question. As it relates to the current infrastructure that's in the Haynesville and the Cotton Valley, just that area in terms of taking that growth and supply away from the market, we don't really see any pinch points there today. And so as you think about accommodating or addressing the growth volumetrically that we have forecasted for our system, in the Ark-La-Tex, which is largely going to be Haynesville and Align, we don't see a requirement for any meaningful investment on the transportation and storage side to get that gas out of that market or 2 markets. In fact, the EGT System that we have there really does provide significant market access to a number of different points and markets to the customers that are upstream of that infrastructure.

Okay. Yes, I think, John, you kind of addressed the overarching question that I had not only in terms of strategically how you beat SESH, which kind of Craig talked about, but also if the acquisitions that you made plus the assets that you have on the ground now kind of opens up the ability to send the gas out of the Haynesville and NGLs out of the Cotton Valley along with gas to the petchem service -- LNG service, Florida gas demand, et cetera. So that sums it up.

That's exactly right. And I think as Rod's mentioned on calls past in previous quarters, our assets are situated at the crossroads of supply and demand and we think they're really situated in a great position. We do think, ultimately, there could be some more opportunity as you think about gas coming out of the northeast that needs to go further south down to the Gulf as there may be some infrastructure opportunities there. And again, with our assets sitting where they are, we think we're in a great position to be able to participate in that should those opportunities arrive.

[Operator Instructions]. We'll take a follow-up question from Ned Baramov with Wells Fargo.

Yes, just had a few housekeeping items. On the leverage guidance of plus or minus 4x, does this assume any ATM issuance during 2018?

Not explicitly, and I think we'll continue to be opportunistic there. But look, with our float, even if we were to turn on the ATM, there's not much opportunity to drive meaningful equity issuance out of that avenue.

That's fair. And then curious if you've had any conversation with Standard & Poor's post the Align transaction? And if yes, is there any specific steps that the agency would like you to take prior to moving into investment grade?

Well, I think, the most recent public dialogue out of S&P is the fees that they published on Enable in May. We continue to have regular dialogue with S&P as well as the other agencies, and we think that the performance that we've had through 2017 and the plans that we're laying out with them for 2018 are consistent with the dialogue that we've had over time. And I think as we think about the metrics that we've laid out for ourselves both in 2016 and '17 and now in 2018, we don't see what we've put out as being a real change in the dialogue and in the discussion. And if we had some other feedback, I'd share it with you, but at this point, we don't.

Helpful. And then my last question in relation to potential M&A activity. I guess, would you be interested in additional asset purchases in the Haynesville? I believe one of your producer customers may be considering a potential sale of gathering assets in that region.

Yes. This is Rod, I'll take that. We would continue to look at opportunities in that area. Again, it would have to provide, I think, the same kind of the benefits that we felt Align brought to us, which was some synergy with our existing assets. But again, yes, we think that's an area that they may be ripe for some additional consolidation. And we're open anywhere we would have a footprint and even off the footprint for the right acquisition. But as we sort of said on the kind of the closing slide before we got into the financial piece on the call, we remain very disciplined in our approach to M&A. It's got to be at the right price, it's got to be the right asset and it's got to bring, I think, some synergies to our business.

We have no further questions at this time. I would like to turn the floor back over to Mr. Sailor for any additional or closing remarks.

Thank you very much. And I'd like to thank all of our employees for their contribution and continued focus on safety, and I'd also provide also like to thank all of you on the call this morning for your interest in Enable. Please have a very safe day. Thank you.

Thank you. This does conclude today's conference call. Please disconnect your lines at this time, and have a wonderful day.