Good day, and welcome to the Enable Midstream Partners First Quarter 2020 Conference Call and Webcast. [Operator Instructions] Please 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. Mr. Beasley, you may begin, sir.

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. To achieve social distancing and limit travel, we only have a small group joining the call in the room today. But, we also have other members of the management team on the phone 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 site. 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 of 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. You can see on slide 4, the key topics we plan to cover this morning. As always, Enable is committed to protecting the health and safety of our employees, customers, and communities where we live and work while maintaining continuity and providing vital energy infrastructure services. Second, we plan to spend time today covering the current market environment and its impact on Enable, the significant demand reductions as a result of COVID-19, as well as the supply impacts from actions taken by Russia and Saudi Arabia have resulted in a significant drop in crude prices, which has impacted companies across the energy value chain. The U.S. rig count has dropped almost 50% since early March, and we are starting to see production curtailed in plays across the U.S. to include certain areas of our footprint. During times of market volatility, we believe Enable benefits from its strong balance sheet, significant scale in key operating basins, and our overall diversified asset portfolio of gathering and processing systems interconnected with natural gas, transportation and storage systems. Third, we have quickly responded to this new market environment by reducing our capital expenditures and operating costs. And we are committed to further action as needed to make sure Enable remains strong in 2020 and beyond. Fourth, despite the challenging business environment, we continue to execute on our strategic objectives and we have several key project and contracting updates to share today. Finally, while the market has changed quickly, we know it is important to provide an updated view for 2020. And John will share our updated outlook for the year, at the end of the call. The next slide highlights our response to COVID-19. As the coronavirus began to spread in the U.S., we…

Thank you, Rod, and good morning, everyone. My remarks will cover our first quarter 2020 operational and financial results at a high level as well as an updated outlook for 2020. As always, you can find a more detailed and comprehensive overview of our financial and operational results in our first quarter earnings release and in our 10-Q, both of which were released earlier this morning. Turning to the operational performance overview slide. We saw a slight decrease in natural gas gathered volumes as a result of lower volumes in the Anadarko and Arkoma Basins offset by volume increases in the Ark-La-Tex Basin. We saw an increase in crude and condensate gathered volumes driven by volume growth in the Anadarko, net of lower gathered volumes in the Williston. Finally, the slight decrease in transported volumes was primarily related to lower gathered volumes. Turning to the financial results on the next slide. Our decline in net income was primarily driven by non-cash impairments that we recognized in our gathering and processing segment during the quarter, offset by revenue increases from FERC's approval of our MRT rate case settlements. The slight decrease in adjusted EBITDA was driven by lower gross margins after adjusting for non-cash items, including an adjustment related to the change in fair value of commodity derivatives. The increase in DCF for the quarter was driven by lower cash payments made pursuant to the partnership’s long-term incentive plan and lower maintenance capital expenditures. After considering the distributions declared, Enable’s distributable cash flow exceeded distributions declared by $142 million, fully funding our $38 million of expansion capital expenditures for the quarter and providing additional cash flow to reduce debt. I will now discuss our updated 2020 outlook on next slide. Before I get into the details, I want to recognize that…

Thanks, John. As we wrap up today's call, I want to emphasize a few key points. First and most importantly, we are committed to protecting the health and safety of employees, customers and communities. Second, Enable is built for the long term. And we continue to benefit from significant scale, diversified assets, integrated systems, unique market solutions, and a strong base of firm demand-driven transportation and storage contracts. Third, Enable remains strong, and the actions we announced in early April create significant financial flexibility and liquidity. Finally, Enable will take the necessary actions to position the Company for success in 2020 and beyond, including continuing to scale expenses and capital to the business environment. That concludes my remarks. And we will now open the call up for your questions.

Thank you, sir. We will now begin the question-and-answer session. [Operator Instructions] And the first question will come from Jeremy Tonet of JP Morgan. Please go ahead.

Hey. Good morning, guys. This is James on for Jeremy. I appreciate you taking my questions. Just starting with the updated guidance, I appreciate the color in terms of the next few months how you're seeing production play out across your portfolio. Looking into the back half of the year and the second half, where are kind of the moving pieces in terms of your G&P segment or what can get you to maybe the high end versus low end of the guide?

Yes, James. It's Rod. I'll start the answer and John or Michael can weigh in to the extent they need to. I think, as we think about it, and we said this in our commentary around the slides, as we look at the back half of 2020, we continue to see a very constructive dry gas environment setting up. If you recall, we saw a lot of activity in the STACK area, which is a gassier play. As producers focused on crude, they moved down into the SCOOP. Our system can handle activity, be it in the SCOOP, be in the STACK, be it anywhere along the Anadarko basin. So, we do see some opportunities for producers to be a little more active on grilling in some of the gassier windows of the Anadarko if we continue to see a constructive gas environment. On the crude side, really, it's going to be highly dependent on demand and the impacts on demand that increased demand would have on price to see I think more a crude-directed drilling. That's where we've seen the biggest pullback from producers of late. Again, stronger gas prices. Again, we expect to continue to see producers continuing to follow their drilling plans in the Haynesville. So, I think that some of the positives that we would expect or could point to would be around a stronger gas price, what that would do for increased drilling in the gassier of your windows of the Anadarko and potentially others in the Ark-La-Tex Basin. And remember, one of the points we really tried to emphasize is, again, given the integrated nature of our system, the fact that many of our producers are gathering customers have transportation obligations on our system, we continue to work with them to find creative ways to get gas molecules to the absolute best market available. So, I think you need to see some of continued constructive gas environment, and we need to see pickup in crude demand.

Okay. Thanks.

Just before you leave, I’ll check if John or Michael have anything to say.

No, Rod. I think, you said it well. I think just to think about it, maybe building on Rod's comments and really at the end of the day, we just think completions, right? We still have some work going on in the area and in the basins. We got rigs running. But, I think we've been a little conservative from a completion standpoint for the balance of the year. And so, if you see some of the conditions that Rod has described, we're all trying to work our way through this current environment and understand how the demand will rebound and what that will mean for prices. I think there's an opportunity to see the wells that are being drilled, so that rig activity is going on now being brought forward into completions.

And then, I just wanted to touch on the -- on the rating agencies and how conversations have been going with them. I assume they've viewed the reconnections as a positive. But, just if there's any rating sensitivities that they've put out for you? I think, S&P put you guys on negative watch. Just how conversations are evolving with them? And if there is any leverage target that you guys are trying to get by year end?

Yes. I think, good question. So, we've been in very regular dialogue with each of the three agencies, certainly leading up to the announcements that we had on the 1st of April and thereafter. I think the primary leverage target that the agencies have put out for us -- and it varies a little bit. But generally, that 4.5 times range is, to the extent we're exceeding that on a sustained basis, that begins to be a point where they'll take a harder look and look -- we are entering into this crisis as we closed out last year, with a with a pretty strong balance sheet and under 4 times, we've maintained that leverage level through the first quarter, roughly 3.85 or 3.86 from an overall leverage level. So, yes, we feel like we're relatively well-positioned. The measures that we've taken as well, on top of that just add to that strength as we continue to march through 2020.

Next, we have Danilo Juvane of BMO Capital.

My first one is perhaps for Rod. In your prepared remarks, you talked about being prepared to push further actions to the extent the situations is there. Are there any specific levers that you're thinking about potentially pulling in terms of further actions, and what necessarily makes you pursue further actions up here?

I appreciate the question. I think, the point to that comment is, I think we took the right and appropriate actions in April to ensure, strengthen the balance sheet and to give us ultimate financial flexibility and liquidity. And all of those options are on the table going forward, depending on what we see or believe the future holds to us. And I wouldn't rate anything one above the other. But I just wanted to be sure that we made the point that we've got a lot of levers to pull, we pulled some of them, and we'll continue to look at pulling those or additional levers as we think the business climate warrants it.

That’s helpful, Rod. Thank you. And now, looking at the O&M for the quarter, it was a little bit lighter than what we expected. You identified when you announced the dividend cut host of initiatives, cost savings measures and so forth. I think $35 million in O&M indentified for this year, $70 million for next year. Was any of that accelerated into the quarter? Just wanted some clarity on that.

I think a little of it was because we started taking some actions around -- again, some of the actions that we're taking in the first quarter will carry on over into next year. But, yes, but, I think we'll continue. And I think we've got all of the $35 million currently identified and we'll continue to address cost cutting as we go through the year. We'll execute on the $35 million. And it would not surprise me if we saw a little bit more. And again, some of those cost reductions are activity-based. And so again, depending on activity levels, we could see some of those go down. We could see some of them go up with some of the discussions we're having around some of the dryer gas areas.

Thanks for the color, Rod. I'll get back in the queue. Thank you.

Next, we have Shneur Gershuni of UBS.

Good morning. This is Agasha [ph] calling in for Shneur. Could you please provide more color on Continental’s curtailments in the Anadarko, which wells could be impacted, do they focus more on vintage wells? Any color would be helpful.

Yes. I don't think it would be appropriate for us to talk about individual customers and curtailments, especially given the Continental will be having I think their earnings call next week, and I'm sure they will be outlining what their plans are. We've tried to point out that the level of curtailments that we've had on our system, and clearly Continental is a large part of those curtailments. But, I don't want to get into any specifics around that. I don't think that would be appropriate for us.

Then, what is management thinking about debt repurchases in the open market? Is it part of the strategy this year to reduce debt, and has Enable repurchased any debt so far?

We released our Q this morning. So, we don't have any debt repurchases disclosed in there. But look, I think what you should and investors should expect from Enable is that we're going to be front-footed on a number of different things and strategies in evaluating those opportunities and looking at how the debt may trade, could be an opportunity for us that we'll evaluate. But we don't have anything specific to comment on there.

[Operator Instructions] Next we have Alexis Kania of Wolfe Research.

Hey. Good morning. Two questions. I think, first is, you mentioned the EBITDA impact of the June assumption of curtailments, which I think was $12 million to $16 million. Is that a fair assumption to use, to the extent that we see extensions of those curtailments, so that’s again, a good sensitivity that we could use on a monthly basis for the balance of the year? And the second question is just on Gulf Run. Is there kind of a date when you would need to kind of decide on kind of the ultimate sizing of that project during the FERC process? I'm sure there's probably some implications in ordering, kind of pipe diameter and alike. So, I'm kind of curious about kind of what the window was to look for additional supply or contracted volumes.

Yes. On the curtailment question, again, just to be clear, we did assume -- in our guidance, we assumed that there would be curtailments in May and June. Again, most of the producers we're talking to are taking it sort of on a monthly basis and have indicated May and very few have pointed to June, but we wanted to -- we felt that was the appropriate timeframe, just given the construct of the curve to take. And the $12 million number was the number that we referenced for June. You could expect that -- again, those wells are somewhat on decline, so that 12 number would slowly decrease over time, should curtailments last past June. We're in the filing process on Gulf Run. And so, yes, there is a date depending on how that process plays out that we will ultimately need to make some decisions around, probably first and foremost the ultimate size. So, we can start thinking about how we want to handle the pipe cost. Today, pipe cost has continued to come down since we announced that project, and that's been favorable to us. Clearly, there will likely be some escalations and other costs. So, right now, we haven't set a firm date that we need to say we're done. It's been an exercise with potential customers that we've had a lot of activity and then, it gets slowed to nothing. And now, we've seen another pickup of activity around potential interest in that project. So, look, our commercial team has done a phenomenal job around that project. They will continue to talk with potential subscribers and capacity right up until we feel that during the regulatory process we need to finalize scope and move forward with making some purchases around -- or making some expenditures related to that project. Probably not as crisp an answer as you'd like, but it is an ongoing situation and we still have some ability to move our time around and still make all of our regulatory and construction deadlines.

Next we have Gabe Moreen of Mizuho.

I appreciate that things are highly uncertain at the moment. But, can you maybe speak to sort of the base volume declines maybe you would expecting in your guidance sort of on a 4Q to 4Q basis or 1Q to 1Q basis in the Anadarko, just curious after curtailments are hopefully done with sooner rather than later where you see the base volumes kind of headed absent drilling?

Yes. Hey. Good morning, Gabe. It’s John. Thank you for the question. And I do appreciate you're recognizing sort of the -- how fluid things are at the moment. I think, as I mentioned a little bit earlier at the outset is, we're not real aggressive on well connects in the Anadarko this year. And so, -- and we've also not put out specific volumetric guidance here. But, I think, it's probably fair to say I think if you were looking at sort of an overall decline over the year, probably in that 10ish percent range. It'd be a little bit stronger than that if you were looking at Q4-to-Q4. But I'm going to stop short of giving you a specific number just as the inactivity continues to evolve and we don't know exactly how things will matriculate through the balance of the year, and as we're looking here on a fluid basis.

Yes. And I might just add that, again, when crude price collapsed and producers started reacting, we've seen -- we're only in sort of the third week of this exercise around most producers shutting in production, and we've seen from our customers some changes in the wells that they planned to shut in. And so, it is a very dynamic environment around that that does make it a little -- I think John said it well. We've made our best assumptions on our outlook based on the activity that we think that we will -- that we have seen and we think that we will see. But again, I think it's -- producers are going to continue to think about where best to find value between ongoing production, their drilling activities and what they want to shut in. I mean, clearly, it's heavily weighted towards crude, but there's a lot of gas with some of those shut-ins. And again, depending on the price construct, you can see that that vary. I think, it'll vary in May and optimistic that we will start to see some of those wells coming on hopefully sooner rather than later.

Thanks, John. Thanks, Rod. And I truly appreciate the uncertainty of the whole exercise. Just want to clarify, John, when you threw out the 10-percentish number, was that Anadarko-specific or sort of a cross-basin kind of stab at the number?

That was more of Anadarko. Yes. That's not necessarily in our expectations for some of the drier gas areas. And that gets into a little bit of the difficulty in giving you these numbers as well, because we continue to be encouraged by and see the activity of -- some of the rig activity converting into completions this year.

Got it. And then, second question is, in the past you've been kind of creative I think in terms of coming up with some projects and solutions around basins where there's been excess processing capacity. You had mentioned earlier about cost saves on compressors. I'm just curious whether in your own network of plants in the Anadarko or even in conjunction with others, kind of solutions being bandied about, I think rationalizing some of that capacity. Just curious on your thoughts there.

Yes. Look, I think, first, thank you. I do think we've been able to provide some creative solutions to those things and I think we'll continue to look. And look, I think rationalizing processing capacity in and around our footprint has been an exercise that we've continued to champion, probably haven't had as much success with that, again, outside of Wildcat where we were in a growing environment, our Wildcat project. But, we've talked about it in a constricting environment also. And so, nothing to announce there. It is something that we continue to think about. We think about ways to use -- better use our assets. And frankly, in areas where we're seeing a lot more activity, we're trying to find creative ways to partner with our peers and competitors to utilize all the capacity that's out there.

Got it. Thanks Rod.

Well, this will conclude our question-and-answer session. I would now like to turn the conference call back over to Mr. Sailor for any closing remarks. Sir?

Thank you very much. And in closing, I want to recognize all of our employees for their hard work, dedication and continued focus on safety during this challenging time. Look, I thank everyone on the call for your interest in Enable. And I hope you all remain safe and healthy. Please, have a great day.

And we thank you, sir and also to the rest of the management team for your time also today. The conference has now concluded. Again, we thank you all for attending today's presentation. At this time, you may disconnect. Thank you.