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Related Party Transactions
12 Months Ended
Dec. 31, 2018
Related Party Transactions [Abstract]  
Related Party Transactions
(5) Related Party Transactions

Simplification of the Corporate Structure

On October 21, 2018, ENLK, ENLC, the General Partner, the Managing Member, and NOLA Merger Sub entered into the Merger Agreement pursuant to which, on January 25, 2019, NOLA Merger Sub merged with and into ENLK, with ENLK continuing as the surviving entity and as a subsidiary of ENLC. See “Note 19—Subsequent Eventsfor more information on the Merger and related transactions.

Transactions with Devon

On July 18, 2018, subsidiaries of Devon sold all of their equity interests in ENLK, ENLC, and the Managing Member of ENLC to GIP for aggregate consideration of $3.125 billion. Accordingly, Devon is no longer an affiliate of ENLK or ENLC. The sale did not affect our commercial arrangements with Devon, except that Devon agreed to extend through 2029 certain existing fixed-fee gathering and processing contracts related to the Bridgeport plant in North Texas and the Cana plant in Oklahoma. See “Note 1—Organization and Summary of Significant Agreements” for additional information regarding the GIP Transaction. Prior to July 18, 2018, revenues from transactions with Devon are included in “Product sales—related parties” or “Midstream services—related parties” in the consolidated statement of operations. Revenues from transactions with Devon after July 18, 2018 are included in “Product sales” or “Midstream services” in the consolidated statement of operations.

For the years ended December 31, 2018, 2017, and 2016, related party transactions with Devon accounted for 5.4%, 14.4%, and 18.5% of our revenues, respectively. We had an accounts receivable balance related to transactions with Devon of $102.7 million as of December 31, 2017. Additionally, we had an accounts payable balance related to transactions with Devon of $16.3 million as of December 31, 2017. Management believes these transactions are executed on terms that are fair and reasonable. The amounts from related party transactions are specified in the accompanying consolidated 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. From January 1, 2018 to July 18, 2018, we recognized $321.3 million of revenue under these agreements. For the years ended December 31, 2017 and 2016, we recognized $615.5 million and $611.8 million of revenue, respectively, under these agreements. Included in these amounts of revenue recognized is revenue from MVCs attributable to Devon of $50.8 million from January 1, 2018 to July 18, 2018 and $81.9 million and $46.2 million for the years ended December 31, 2017 and 2016, 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.

EOGP Agreement with Devon

In January 2016, in connection with the acquisition of EOGP, we acquired a gas gathering and processing agreement with Devon Energy Production Company, L.P. (“DEPC”) pursuant to which EOGP 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 EOGP 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 $77.6 million, $100.4 million, and $34.4 million of our combined revenues from January 1, 2018 to July 18, 2018 and for the years ended December 31, 2017 and 2016, respectively.

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. 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 $66.6 million, $78.0 million, and $107.2 million of our combined revenue from January 1, 2018 to July 18, 2018 and for the years ended December 31, 2017 and 2016, respectively.

VEX Transportation Agreement

In connection with our acquisition of the VEX assets from Devon, 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 $3.5 million, $17.8 million, and $18.7 million of service revenues from January 1, 2018 to July 18, 2018 and for the years ended December 31, 2017 and 2016, 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 our Acacia pipeline in Texas. This agreement accounted for approximately $4.9 million, $13.8 million, and $15.2 million of our combined revenues from January 1, 2018 to July 18, 2018 and for the years ended December 31, 2017 and 2016, respectively.

GCF Interest

In connection with the consummation of the Business Combination and the GIP Transaction, a wholly-owned subsidiary of Devon transferred to us its 38.75% general partner interest in GCF. Our interest in GCF contributed approximately $10.5 million, $12.6 million, and $3.4 million to our income from unconsolidated affiliate investment from January 1, 2018 to July 18, 2018 and for the years ended December 31, 2017 and 2016, respectively.

Cedar Cove Joint Venture

On November 9, 2016, we formed 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 and cost of sales from the Cedar Cove JV was immaterial. For the years ended December 31, 2018 and December 31, 2017, we recorded service revenue of $0.5 million and $5.4 million, respectively, that is recorded as “Midstream services—related parties” on the consolidated statements of operations. In addition, for the years ended December 31, 2018 and December 31, 2017, we recorded cost of sales of $44.1 million and $30.6 million, respectively, related to our purchase of residue gas and NGLs from the Cedar Cove JV subsequent to processing at our Central Oklahoma processing facilities. We had an accounts receivable balance related to transactions with the Cedar Cove JV of $0.7 million at December 31, 2018. Additionally, we had an accounts payable balance related to transactions with the Cedar Cove JV of $4.3 million at December 31, 2018. The accounts receivable and payable balances related to transactions with the Cedar Cove JV were immaterial at December 31, 2017.

Transactions with ENLK

We paid ENLK $2.5 million, $2.4 million, and $2.3 million as reimbursement during the years ended December 31, 2018, 2017, and 2016, 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 $26.6 million, $48.4 million, and $31.5 million for our interest in EOGP’s capital expenditures for the years ended December 31, 2018, 2017, and 2016, respectively. We pay our contribution for EOGP’s capital expenditures to ENLK monthly, net of EOGP’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. Following the Merger, we transferred our 16.1% limited partner interest in EOGP to the Operating Partnership. See “Note 19—Subsequent Events” for more information regarding these transactions.

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. From January 1, 2018 to July 18, 2018 and the years ended December 31, 2017 and 2016 we incurred approximately $0.4 million, $1.2 million, and $2.3 million, respectively, in taxes that are subject to the tax sharing agreement. Effective July 18, 2018, ENLK, ENLC, and Devon signed a supplemental agreement to continue the tax sharing agreement.