-0.15 ENLC (GP) $ 11.57 -1.28% Volume: 1,647,402 January 22, 2019
-0.23 ENLK (MLP) $ 13.35 -1.69% Volume: 736,153 January 22, 2019


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Investor FAQ

1. Why does EnLink Midstream trade under two ticker symbols?
EnLink Midstream offers two equity securities to meet different investing characteristics: EnLink Midstream Partners, LP (the Partnership) (NYSE:ENLK) and EnLink Midstream, LLC (the General Partner) (NYSE:ENLC).

The Partnership is a master limited partnership (MLP) that owns and operates most of the assets of our midstream energy business. MLPs generally are not subject to federal income tax, and items of income, gain, loss and deductions are passed through to investors and reported on a Schedule K-1. Units associated with the Partnership are traded on the New York Stock Exchange under the symbol ENLK.

EnLink Midstream, LLC is structured as a limited liability company but it elects to be taxed as a “C” corporation. This business model provides institutions that are restricted from direct MLP investments with a means of participating in the Partnership’s growth. Many traditional institutions have difficulty dealing with certain tax issues related to MLP ownership, including tax reporting.

The General Partner’s distributions are reported on Form 1099 and are treated as dividends for tax purposes. Units associated with the General Partner are traded on the New York Stock Exchange under the ticker symbol ENLC. The General Partner’s cash flow consists of cash distributions from its indirect ownership interests in the Partnership, EnLink Midstream Holdings, LP and the E2 companies as well as its incentive distribution rights in the Partnership. The Partnership is required to distribute its cash on hand at the end of each quarter, less reserves established by the General Partner to provide for the proper conduct of the Partnership’s business or provide for future distributions, all subject to approval by the board of directors.

2. What is EnLink Midstream’s relationship with Devon Energy Corporation?
EnLink Midstream was formed through the combination of Crosstex Energy and substantially all of the U.S.-midstream assets of Devon Energy Corp. Devon is one of the largest independent oil and gas producers in North America. As of October 2017, Devon (or its subsidiaries) owned approximately 64 percent of the outstanding units of the General Partner and approximately 23 percent of the outstanding units of the Partnership. In addition, Devon has designated a majority of the directors on the board of each of the General Partner and the Partnership. Due to these ownership interests, Devon has a significant interest in promoting the success of EnLink Midstream’s business.

3. What is a Master Limited Partnership?
An MLP is a publicly traded limited partnership. To qualify as an MLP, at least 90 percent of a partnership’s income must be “qualifying income,” which generally includes certain types of income and gains derived from natural resources, minerals and other specific sources. Ownership of limited partner interests in MLPs are designated in units, and combine the tax advantages of a partnership with the liquidity of a publicly traded stock.

4. What are the benefits of the MLP structure?
MLPs are not subject to U.S. federal corporate income taxes therefore allowing for more pass-through income to its investors. An MLP also avoids, what is referred to as, “double taxation of income” that is typical for a corporation. With a corporation, federal income taxes can be paid both at the corporate level (on the corporation’s taxable income) and by the corporate shareholder (on the dividends received).

5. What is the difference between the distributions the Partnership and the General Partner pays?
EnLink Midstream currently pays both distributions to holders of units of the Partnership and the General Partner. MLPs generally pay out all “available cash” to unitholders in the form of distributions (subject to determination of a company’s Board of Directors). In addition, MLPs generally distribute all taxable income and loss to the unitholders. In our case, most cash distributions have had a “tax shield” as a result of the distribution of taxable losses. The distributions paid by ENLC, the General Partner, have been (and are expected to continue to be) either a return of capital or qualified distribution income. ENLC pays distributions from cash distributions it receives from its ownership interests in the Partnership, Midstream Holdings and the E2 companies and cash from incentive distribution rights.

6. What are incentive distribution rights?
Incentive distribution rights, or IDRs, provide the General Partner with performance-based pay for successfully managing the MLP, which is measured by cash distributions to the ownership of the units of the Partnership. As described below, the amount of the distributions to the General Partner depends on the distributions made to the unitholders of the Partnership.

7. What percentage of the distribution does the general partner receive in IDRs?
Under the quarterly incentive distribution provisions, the General Partner is entitled to 13.0% of amounts the Partnership distributes in excess of $0.25 per unit per quarter, 23.0% of the amounts the Partnership distributes in excess of $0.3125 per unit per quarter and 48.0% of amounts the Partnership distributes in excess of $0.375 per unit per quarter.

8. What is a “dropdown” transaction?

The term “dropdown” transaction, when used in relation to the Partnership, refers to a transaction where the General Partner or Devon transfers assets or ownership interests to the Partnership or where Devon transfers assets or ownership interests to the General Partner. For example, if the General Partner were to transfer its 50% interest in Midstream Holdings to the Partnership, that would be a “dropdown” transaction. If Devon were to transfer a midstream asset to either the Partnership or the General Partner, that would also be a “dropdown” transaction. The consideration in such “dropdown” transactions is typically cash, equity or a combination thereof from the acquiring entity to the entity that is transferring the asset(s).

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