Good day, and welcome to the Enable Midstream Partners Second Quarter 2019 Earnings Conference Call and Webcast. All participants will be in a listen-only mode. [Operator Instructions] After today’s presentation, there will be an opportunity to ask questions. [Operator Instructions] Please also note this event is being recorded. I would now like to turn the conference over to Enable's Senior Director of Investor Relations, Mr. Matt Beasley. Please go ahead.

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 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 a 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 will turn the call over to Rod Sailor.

Thanks Matt. Good morning and thank you for joining us on today's call. Enable had another solid quarter, highlighted by growth across key operational and financial measures when compared to the second quarter of last year. For operational measures Enable saw growth in natural gas gathered volumes, natural gas processed volumes, crude oil and condensate gathered volumes and natural gas transported volumes. Our crude oil and condensate gathered volumes were the highest quarterly volumes we have reported, which were primarily driven by the Velocity acquisition and continued growth in the Williston Basin. For financial measures, Enable grew net income, adjusted EBITDA, distributable cash flow, and distribution coverage. Our Board declared a common unit distribution of $0.3305 for the second quarter, representing a one-time increase in the rate of distributions on our LP units of approximately 4%, compared to the first quarter's distribution, which equates to a $0.05 increase on an annualized basis. After the distribution increase, our distribution coverage ratio of 1.37 times funded over 60% of our expansion capital spending for the quarter. I plan to cover more on the distribution increase on the next slide. But before I do, I want to highlight the amended Schedule 13D that CenterPoint filed last night with the SEC. In this filing, CenterPoint indicates it does not intend to reduce its common unit ownership in Enable and currently plans to hold its common units and utilize any cash distributions to finance a portion of its capital expenditure program, which we believe removes the overhang on Enable units. CenterPoint and OG&E have been strong supporters of Enable strategy through their Board representation and we look forward to our sponsors' continued support on Enable's strategic direction. The next slide highlights the key drivers for the quarter's distribution increase. As you can see we have…

Thank you, Rod, and good morning, everyone. I will now cover a few of our key operational and financial metrics for the quarter. As always, you can find a more detailed and comprehensive overview of our financial and operational results in our second quarter earnings release and in our 10-Q both of which were issued earlier this morning. Turning to slide 9, customer activity and well results in the Anadarko Basin drove volume growth in our Gathering and Processing segment compared to the second quarter of 2018. As you can see, we had a 4% increase in total natural gas gathered volumes and a 9% increase in total natural gas processed volumes in the second quarter of 2019 compared to the prior year. The substantial increase in our crude oil and condensate gathered volumes for the second quarter compared to the same period a year ago was primarily driven by our recent Anadarko Basin acquisition as well as a 29% increase in crude oil gathered volumes in the Williston Basin as a result of continued drilling activity by XTO. In our Transportation and Storage segment, a 14% increase in our transported volumes over the prior year was a result of new contracted capacity on EGT including volumes from EGT's case project. Moving on to our financial results on the next slide. Our adjusted EBITDA increased by 15% for the second quarter of 2019 when compared to 2018. The higher adjusted EBITDA was driven by higher gross margin after adjusting for non-cash items due to higher natural gas gathered and processed volumes and higher crude oil and condensate volumes, the effects of which were partially offset by higher O&M and G&A due to an increase in payroll-related cost, a decrease in the amount of capitalized overhead cost and an increase in…

Thanks John. Enable is a strong company that is built for the long-term. Our large scale fully integrated midstream platform is a critical link between growing production in downstream markets. Our contracts are primarily fee-based and we expect approximately 96% of gross margin for the balance of the year to be fee-based or hedged. We have achieved strong business performance with over 40% growth in adjusted EBITDA from 2015 to the midpoint of our 2019 outlook range. Our investment-grade balance sheet is strong and we have significant liquidity available to fund future expansions. The next slide highlights our track record as a responsible operator and community partner. We are committed to designing, constructing, and operating our assets with a focus on environmental stewardship and regulatory compliance. As an INGAA member, we have joined with others in the industry to commit to continuously improving practices to minimize methane emissions from interstate natural gas transmission and storage operations in a prudent and environmentally responsible manner. We have been a member of the EPA's voluntary Natural Gas STAR program at our Wetumka plant since 2003, achieving voluntary methane emissions reductions at the facility through a combination of process improvements and capital investments and we have applied these lessons learned to each of our new processing facilities built after 2008. We have participated in species conservation programs including programs for the Lesser Prairie Chicken and the American burying beetle. Over the past five years, Enable has piloted a new right-of-way maintenance method that reduces right-of-way maintenance costs, while improving maintenance access and promoting biodiversity beneficial to pollinator and wildlife habitats. In recognition of these efforts, the National Wild Turkey Federation presented Enable with its Energy for Wildlife National Achievement Award and the Arkansas Game and Fish Commission awarded Enable its Corporate Conservation Partnership Award. Enable is also a strong supporter of communities across our footprint both through financial donations and employee volunteer time. Enable encourages employees to be active in the communities we live and work in and to further that provides each employee up to 16 hours of paid time-off per year for charitable volunteer activities. In 2018, Enable employees spent over 20,000 hours serving local communities. Enable is a proud supporter of the United Way and Enable and its employees pledged $560,000 to United Way agencies across the company's footprint during our most recent United Way campaign. We have also partnered with the Oklahoma City Thunder to build basketball courts in Oklahoma communities and we are honored emergency responders in 2018 through the Enable's Safety Partner Program. In closing, we continue to work every day to make Enable a better stronger company, and we remain committed to sustainable long-term value creation. That concludes my remarks, and I will now open the call up for your questions.

Thank you. We will now begin the question-and-answer session. [Operator Instructions] And our first question comes from Jeremy Tonet of JPMorgan. Please go ahead.

Hi. Good morning.

Good morning, Jeremy. Just wanted to circle up with how you see producer activity shaping up in your neck of the woods? It seems like the rigs have fallen a bit, but the efficiencies improved there. And so is this kind of trajectory of volumes in line with your guidance? And do you see any changes there, or any thoughts as far as how that trajectory might end the year versus your expectations? Just want to see if you're still comfortable in 2020, how things look going forward there?

Well, Jeremy, thanks for your question. As you know, we haven't given any 2020 guidance, but we still as John mentioned on his section of the call reaffirmed our 2019 guidance. We've clearly seen a pullback in prices, but we continue to see activity along our footprint. And as you know, what we expect to see with this pullback in gas prices is producers continuing to target more oily areas across our footprint, specifically as you think about the Anadarko, the SCOOP area. It was one of the reasons that last year we made our acquisition in Velocity Midstream, because we wanted to be sure that we were able to pick up that valuable piece of the commodity stream. So we're still – again, we would have not made our decision around the distribution if we weren't comfortable with the position of the business as we stand here.

Great. Thanks for that. And then just turning towards distribution increase there. I was wondering was there any consideration as far as unit repurchases as part of the mix here? Given that the yield is quite high on ENBL as it is right now, just wondering if unit repurchases could play a role in the future as far as returning capital?

We look at all of our options when we make a decision whether to keep the distribution flat make an increase or look at other ways to use our capital. I appreciate the question, but we really feel that at this point in time since we have not raised our distribution since 2015 that the first step that we should go in is again is the distribution increase that we made -- or announced this morning. So anyway, that's where we stand we'll continue to evaluate other options as we develop our plans for future capital.

That's all for me. Thanks for taking my question.

Thanks, Jeremy.

Our next question comes from Shneur Gershuni of UBS. Please go ahead.

Hi. Good morning guys. I'm going to ask Jeremy's question kind of again, but maybe with a different bend to it. With respect to the production profile, you've got the rig count down call it 20%, but you've got efficiencies up. Maybe to ask a question a little differently, do you see that drilled uncompleted inventory in a year from now the same as it is today? Is there enough of an efficiency pickup to offset the drop in rig count, I guess, effectively is the question.

We can't really talk about 2020, so I'll continue to ring that bell. Again, we feel like that we're going to continue to see a shift towards more oily areas. The SCOOP is a more mature basin, so there could be more pad drilling. We're very comfortable with the trajectory of the business, as we work through 2019. We'll give further guidance on 2020. We typically do that on our November call or what used to be our November call. So, I think, again, as we stand here we would not have made our distribution increase, we didn't make that increase lightly. We thought about it, we factored in how we expect the business to perform. And so, again very comfortable with the performance and the direction of Enable Midstream.

Okay. Fair enough. And just with respect to the return of capital, can you walk us actually through the decision tree itself? And I do appreciate that you hadn't increased you distribution since 2015 and so forth. I was just kind of wondering if you can walk us through the decision tree going forward? I mean, you are more than 50% on your CapEx, so it does make sense to consider it, but to Jeremy's point, do you consider unit buybacks on a go-forward basis, or is this more about the general partner would prefer to get cash flows and higher IDR payments? And is that overwhelming the map on buyback -- or unit buyback?

Shneur, this is John. I wouldn't necessarily point to the latter end of your comments with respect to the general partner on the IDRs, but I think as we think about it just given the historical trajectory that the business has been on the increases in distributable cash flow, where we sit. Overall, with respect to our financial objectives, which we've continued to point to over the last number of years has primarily been driven around strong distribution coverage, maintaining an investment-grade balance sheet, which we have done and we expect to continue to do. We haven't increased the return to shareholders for some time and felt that this was a good time to do that. So as it relates to that same set of analysis on a go-forward basis, the decision tree would be fairly similar in terms of looking at longer-term expectations for the business, how we expect to perform in light of our current distribution policy, relative to our financial objectives and being confident in our ability to maintain those. I think when we think about buybacks or something along those lines, we go back and consider the level of float in ENBL, which is not large, although it has increased this year with some of the other large unitholder transactions that have occurred primarily the Ark line transaction that's occurred. But we don't necessarily think that buybacks are the right path forward for us today.

One final question if I may, when I kind of think about the unicorn metrics in general you kind of tick a lot of the boxes off right? You've got the lower leverage, you've got the coverage, you've got the equity funding and so forth. I mean, the one piece that sort of -- the one checkmark you don't have really is the fact that there are IDRs. Is there any discussion about trying to remove the IDRs and to sort of trying to simplify the structure a little bit further?

Well I think what we have always said and I want to reiterate, we're not in the IDRs as it stands here today. I think we have fairly consistently said, our goal here at Enable is to maintain as competitive cost of capital as we can to the extent that we view the IDRs as an issue that would be something that we would engage in conversations with our Board and our Board has always been very supportive of what Enable needs to do as it relates to its strategic direction in the business.

If I can clarify so you are saying, there is no point in dealing with the IDRs until it becomes an issue?

Yes.

All right. Thank you very much guys. Have a great day.

Thank you.

Our next question comes from Gabe Moreen of Mizuho. Please go ahead.

Good morning. Just had a couple of questions. On the T&S side of things, can you speak to some of pricing behind these contract renewals both the ones you've achieved as well as the ones that are pending just in kind of broaden terms are these up down largely flat?

I think if you look at it in total Gabe -- this is Craig Harris. I think it'd be largely flat. It's a kind of mixed bag based on where certain customers sit within the system and so some of them are increases some had more competitive environment, but I think generally it's -- if you look at them in total it's relatively flat.

Great. And then as it pertains to NGL hedging and nat gas hedging, clearly you've got a bit less exposure than some peers out there, but can you just talk about your approach to hedging in 2020 in light of NGL markets and nat gas markets where they are today?

Yes, sure. Thanks, Gabe this is John. Our approach as it's been has really been to look at most closely the next 12 months and where we are and target somewhere between 50% and 80%. Certainly with respect to the current year which is what we're there, it's not ahead of that now and we're looking at stepping into 2020 we've been doing that with some of the commodity pricing dynamics. We've not been quite as aggressive this year looking at some of the forward peers as we have been in years past. Just based on what we're seeing show up in the market, the forward marks, particularly plus a quarter, plus two quarters are actually realizing the way that we're seeing and realizing in the cash markets, which tends to be a little bit stronger on the gas side. So we have been a little bit slower to hedging, but we continue to move into our hedges as we think appropriate again looking at that next 12 months.

Thanks, John. And last question from me, is a little broader. Some of your producer customers have started or in their process of monetizing some of their water delivery and disposal systems. Is that's something you'd ever be interested in? I know you obviously made a big step out, with Velocity, to kind of doing all service, sort of offering there in the SCOOP. So just speaking generally your thoughts on water and getting into that business?

Yeah. I mean water is a line of business that we have continued to look at, and evaluate. And to look at it makes sense. If we're already in the gas and liquid businesses that, that is something that we want to do. We do move some water in the Bakken. But -- so that's an area that we continue to evaluate, as a potential line of business.

Okay, thanks, Rod. Thanks everyone.

Thank you.

Our next question comes from Colton Bean of Tudor, Pickering, Holt. Please go ahead.

Good morning. So I appreciate the commentary, just in terms of producers pivoting to more of an oily focus. So, is that relates to the Ark-La-Tex system? Have you seen any changes in your discussions with counterparties there, in terms of activity levels for the back half of the year?

No. We really haven't. And we continue to see volume growth, in the back half of 2019.

Got it and so then, Yeah it looks like the rig count has been fairly steady thus far and no real expectations at least to the near-term then?

That's correct.

Got it, and then, on the distribution increase. And I think it's been asked a number of different ways. But as it relates to capital spend in 2020, should we read into that at all in terms of increasing distribution here? And maybe it means a lower capital spend going forward?

No. I wouldn't read anything, as it relates to capital spend going forward, related to the distribution increase. As we said, we brought some projects online, the businesses continued to perform very well. We thought now was the time for distribution increase. So it really, -- I wouldn't really draw a line between that. And any future capital needs.

That's helpful. I appreciate it.

Our next question comes from TJ Schultz of RBC Capital Markets. Please go ahead.

Hi. Good morning. What distribution coverage, do you feel is appropriate just for your business longer term? Just given some of the changes or uncertainty on the rig activity?

Yeah. Good question. TJ hey, this is John. All we've guided to from a coverage standpoint is 2019. And as I mentioned, a little bit earlier, with respect to one of the questions around our go-forward distribution policy, we'll continue to target and maintain the financial objectives that we'd set out in the past around, ensuring that that our balance sheet is investment-grade, as we think about the two primary determinants of that, with respect to both coverage and leverage.

Okay. Fair enough. And just one more the MRT, the rate case, what's the next step there? You mentioned you're reviewing some testimony. Is the next event, the hearing that was moved? I think into early 2020 or can anything occur prior to that?

Well, I would just say that, we're -- we continue to be in settlement discussions with our customers. So we're hoping to move those forward.

Okay, got it. Thanks.

Thanks.

[Operator Instructions] Our next question comes from Ned Baramov of Wells Fargo. Please go ahead.

Good morning and thanks for taking the question. I think, you noted some short-term gas offloading opportunities in Ark-La-Tex. Maybe can you talk about what's the average term of these agreements? And are there additional such opportunities?

That was a very short-term in nature. We just were able to take advantage of our system and provide a producer the ability to move some gas. Again, one of the things that we talk a lot about is trying to have significant scale in the areas that we operate. And we have historically seen a number of opportunities to move other customers' gas, given the reach of our -- the scale. We're seeing a lot in the Anadarko. This was one that came to bear in the Haynesville. So yes, and I think those opportunities will continue to be out there and really it depends on whether we have the capacity. Our Haynesville system is close to full at the moment, but to the extent we can find those. I think Enable has always tried itself on finding creative solutions for customers both long-term and short-term. This was a short-term opportunity. We did not want to pass that. We may or may not be able to find that opportunity again in that area, but our commercial folks are continuing to look, continuing to talk to customers.

Got it. And then switching gears to Gulf Run. Could you maybe provide some color as to why the announcement of the final scope is taking a little bit longer than originally anticipated?

Again the one thing I want to make sure that I stated is it really hasn't moved our in-service date any at all. We have a lot of front-end time built in. It really just relates to -- we continue to have discussions with customers about coming onto that system, our ability to expand the size of that system and so given that it doesn't impact our in date -- our in-service date, we felt it important to continue to have those discussions and that's why we've moved it out. It's strictly only related to our continuing efforts to try to increase the size of that pipeline.

Got it. That’s all I had. Thank you.

Thanks.

Our next question comes from Danilo Juvane of BMO Capital. Please go ahead.

Thank you, and good morning. I wanted to ask Shneur's question may be a little bit differently on the distribution. Just -- obviously, you've increased distribution right now today here. Obviously, it underscores that you have faith and confidence in the strength of your business, but in terms of sustainability of that going forward and I know that you've not necessarily given out guidance, but how should we think about that going forward?

We have -- look, we've always taken great pride in the fact that when we make a distribution announcement, we're making covenant if you like, we need to continue to maintain that distribution. So, we did not take distribution increases lightly. We do not take our distribution lightly.

Got it. That’s really from me. Thank you so much.

Thank you.

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

Well, again, thanks everybody on the call for your interest in Enable. In closing, I just want to recognize all of our employees for their hard work and dedication and to everybody on the call, please have a safe day.

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