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Related Party Transactions
12 Months Ended
Dec. 31, 2017
Related Party Transactions [Abstract]  
Related Party Transactions
(5) Related Party Transactions

We engage in various transactions with Devon and other related parties. For the years ended December 31, 2017, 2016 and 2015, Devon was a significant customer to us. Devon accounted for 14.4%, 18.5% and 16.6% of our revenues for the years ended December 31, 2017, 2016 and 2015, respectively. We had an accounts receivable balance related to transactions with Devon of $102.7 million and $100.2 million as of December 31, 2017 and 2016, respectively. Additionally, we had an accounts payable balance related to transactions with Devon of $16.3 million and $10.4 million as of December 31, 2017 and 2016, respectively. Management believes these transactions are executed on terms that are fair and reasonable. The amounts from related party transactions are specified in the accompanying financial statements.

Gathering, Processing and Transportation Agreements Associated with Our Business Combination with Devon

As described in Note 1—Organization and Summary of Significant Agreements,” Midstream Holdings was previously a wholly-owned subsidiary of Devon, and all of its assets were contributed to it by Devon. On January 1, 2014, in connection with the consummation of the Business Combination, EnLink Midstream Services, LLC, a wholly-owned subsidiary of Midstream Holdings (“EnLink Midstream Services”), entered into 10-year gathering and processing agreements with Devon pursuant to which EnLink Midstream Services provides gathering, treating, compression, dehydration, stabilization, processing and fractionation services, as applicable, for natural gas delivered by Devon Gas Services, L.P., a subsidiary of Devon (“Gas Services”), to Midstream Holdings’ gathering and processing systems in the Barnett, Cana-Woodford and Arkoma-Woodford Shales. On January 1, 2014, SWG Pipeline, L.L.C. (“SWG Pipeline”), another wholly-owned subsidiary of Midstream Holdings, entered into a 10-year gathering agreement with Devon pursuant to which SWG Pipeline provides gathering, treating, compression, dehydration and redelivery services, as applicable, for natural gas delivered by Gas Services to another of our gathering systems in the Barnett Shale.

These agreements provide Midstream Holdings with dedication of all of the natural gas owned or controlled by Devon and produced from or attributable to existing and future wells located on certain oil, natural gas and mineral leases covering land within the acreage dedications, excluding properties previously dedicated to other natural gas gathering systems not owned and operated by Devon. Pursuant to the gathering and processing agreements entered into on January 1, 2014, Devon has committed to deliver specified minimum daily volumes of natural gas to Midstream Holdings’ gathering systems in the Barnett, Cana-Woodford and Arkoma-Woodford Shales during each calendar quarter. We recognized revenue under these agreements of $615.5 million, $611.8 million and $596.3 million for the years ended December 31, 2017, 2016 and 2015, respectively. Included in these amounts of revenue recognized is revenue from MVCs attributable to Devon of $81.9 million, $46.2 million, and $24.4 million for the years ended December 31, 2017, 2016 and 2015, respectively. Devon is entitled to firm service, meaning that if capacity on a system is curtailed or reduced, or capacity is otherwise insufficient, Midstream Holdings will take delivery of as much Devon natural gas as is permitted in accordance with applicable law.

The gathering and processing agreements are fee-based, and Midstream Holdings is paid a specified fee per MMBtu for natural gas gathered on Midstream Holdings’ gathering systems and a specified fee per MMBtu for natural gas processed. The particular fees, all of which are subject to an automatic annual inflation escalator at the beginning of each year, differ from one system to another and do not contain a fee redetermination clause.

In connection with the closing of the Business Combination, Midstream Holdings entered into an agreement with a wholly-owned subsidiary of Devon pursuant to which Midstream Holdings provides transportation services to Devon on its Acacia pipeline.

EnLink Oklahoma T.O. Gathering and Processing Agreement with Devon

In January 2016, in connection with the acquisition of EnLink Oklahoma T.O., we acquired a gas gathering and processing agreement with Devon Energy Production Company, L.P. (“DEPC”) pursuant to which EnLink Oklahoma T.O. provides gathering, treating, compression, dehydration, stabilization, processing and fractionation services, as applicable, for natural gas delivered by DEPC. The agreement has an MVC that will remain in place during each calendar quarter for four years and an overall term of approximately 15 years. Additionally, the agreement provides EnLink Oklahoma T.O. with dedication of all of the natural gas owned or controlled by DEPC and produced from or attributable to existing and future wells located on certain oil, natural gas and mineral leases covering land within the acreage dedications, excluding properties previously dedicated to other natural gas gathering systems not owned and operated by DEPC. DEPC is entitled to firm service, meaning a level of gathering and processing service in which DEPC’s reserved capacity may not be interrupted, except due to force majeure, and may not be displaced by another customer or class of service. This agreement accounted for approximately $100.4 million and $34.4 million of our combined revenues for the years ended December 31, 2017 and 2016, respectively.

Cedar Cove Joint Venture
 
On November 9, 2016, we formed a joint venture (the “Cedar Cove JV”) with Kinder Morgan, Inc. consisting of gathering and compression assets in Blaine County, Oklahoma. Under a 15-year, fixed-fee agreement, all gas gathered by the Cedar Cove JV will be processed at our Central Oklahoma processing system. For the period from November 9, 2016 through December 31, 2016, revenue generated from processing gas from the Cedar Cove JV was immaterial. For the year ended December 31, 2017, we recorded service revenue of $5.4 million that is recorded as “Midstream services—related parties” on the consolidated statements of operations. In addition, for the year ended December 31, 2017, we recorded cost of sales of $30.6 million related to our purchase of residue gas and NGLs from the Cedar Cove JV subsequent to processing at our Central Oklahoma processing facilities.

Other Commercial Relationships with Devon

As noted above, we continue to maintain a customer relationship with Devon originally established prior to the Business Combination pursuant to which we provide gathering, transportation, processing and gas lift services to Devon in exchange for fee-based compensation under several agreements with Devon. The terms of these agreements vary, but the agreements began to expire in January 2016 and continue to expire through July 2021, renewing automatically for month-to-month or year-to-year periods unless canceled by Devon prior to expiration. In addition, we have agreements with Devon pursuant to which we purchase and sell NGLs, gas and crude oil and pay or receive, as applicable, a margin-based fee. These NGL, gas and crude oil purchase and sale agreements have month-to-month terms. These historical agreements collectively comprise $78.0 million, $107.2 million and $107.5 million of our combined revenue for the years ended December 31, 2017, 2016, and 2015, respectively.

VEX Transportation Agreement

In connection with the VEX Drop Down, we became party to a five-year transportation services agreement with Devon pursuant to which we provide transportation services to Devon on the VEX pipeline. This agreement includes a five-year MVC with Devon. The MVC was executed in June 2014, and the initial term expires July 2019. This agreement accounted for approximately $17.8 million, $18.7 million and $17.8 million of service revenues for the years ended December 31, 2017, 2016 and 2015, respectively.

Acacia Transportation Agreement

In connection with the consummation of the Business Combination, we entered into an agreement with a wholly-owned subsidiary of Devon pursuant to which we provide transportation services to Devon on its Acacia line. This agreement accounted for approximately $13.8 million, $15.2 million and $16.4 million of our combined revenues for the years ended December 31, 2017, 2016 and 2015, respectively.

GCF Agreement

In connection with the consummation of the Business Combination, we entered into an agreement with a wholly-owned subsidiary of Devon pursuant to which Devon agreed, from and after the closing of the Business Combination, to hold for the benefit of Midstream Holdings the economic benefits and burdens of Devon’s 38.75% general partner interest in Gulf Coast Fractionators in Mont Belvieu, Texas. This agreement contributed approximately $12.6 million, $3.4 million and $13.0 million to our income from unconsolidated affiliate investment for the years ended December 31, 2017, 2016 and 2015, respectively.

Transactions with ENLK

We paid ENLK $2.4 million, $2.3 million and $2.1 million as reimbursement during the years ended December 31, 2017, 2016, and 2015, respectively, to cover our portion of administrative and compensation costs for officers and employees that perform services for ENLC. This reimbursement is evaluated on an annual basis. Officers and employees that perform services for us provide an estimate of the portion of their time devoted to such services. A portion of their annual compensation (including bonuses, payroll taxes and other benefit costs) is allocated to ENLC for reimbursement based on these estimates. In addition, an administrative burden is added to such costs to reimburse ENLK for additional support costs, including, but not limited to, consideration for rent, office support and information service support.

We paid ENLK $48.4 million and $31.5 million for our interest in EnLink Oklahoma T.O.s’ capital expenditures for the years ended December 31, 2017 and 2016, respectively. We pay our contribution for EnLink Oklahoma T.O.’s capital expenditures to ENLK monthly, net of EnLink Oklahoma T.O.’s adjusted EBITDA distributable to us, which is defined as earnings before depreciation and amortization and provision for income taxes and includes allocated expenses from ENLK.

On October 29, 2015, ENLK issued 2,849,100 common units at an offering price of $17.55 per common unit to a subsidiary of ours for aggregate consideration of approximately $50.0 million in a private placement transaction.

Tax Sharing Agreement

In connection with the consummation of the Business Combination, we, ENLK and Devon, entered into a tax sharing agreement providing for the allocation of responsibilities, liabilities and benefits relating to any tax for which a combined tax return is due. For the years ended December 31, 2017, 2016 and 2015 we incurred approximately $1.2 million, $2.3 million and $3.0 million, respectively, in taxes that are subject to the tax sharing agreement.