Related Party Transactions

12 Months Ended

Dec. 31, 2020

Related Party Transactions [Abstract]

Related Party Transactions

(4) Related Party Transactions

(a)Transactions with Cedar Cove JV

For the year ended December 31, 2018, we recorded service revenue of $0.5 million as “Midstream services—related parties” on the consolidated statements of operations. Additionally, for the years ended December 31, 2020, 2019, and 2018, we recorded cost of sales, exclusive of operating cost and depreciation and amortization related to our operating segments of $8.7 million, $21.7 million, $44.1 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 no accounts receivable balance related to transactions with the Cedar Cove JV for the years ended December 31, 2020 and 2019, respectively. We had an accounts payable balance related to transactions with the Cedar Cove JV of $1.0 million and $1.1 million at December 31, 2020 and 2019, respectively.

(b)Transactions with GIP

For the year ended December 31, 2020, we recorded general and administrative expenses of $0.2 million related to personnel secondment services provided by GIP. Expenses related to transactions with GIP were not material for the years ended December 31, 2019 and 2018.

(c)Transactions with ENLK

Simplification of the Corporate Structure. On January 25, 2019, we completed the Merger, an internal reorganization pursuant to which ENLC owns all of the outstanding common units of ENLK. See “Note 1—Organization and Summary of Significant Agreements” for more information on the Merger and related transactions.

Reimbursement of Expenses. Prior to the Merger, we paid ENLK $2.5 million during the year ended December 31, 2018 as reimbursement of ENLC’s portion of administrative and compensation costs for officers and employees that performed services for ENLC. Officers and employees that performed services for us provided 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) was allocated to ENLC for reimbursement based on these estimates. In addition, an administrative burden was 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. Subsequent to the closing of the Merger, ENLC no longer is allocated these administrative and compensation costs.

(d)Transactions with Devon

On July 18, 2018, subsidiaries of Devon sold all of their equity interests in ENLK, ENLC, and the Managing Member 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 year ended December 31, 2018, related party revenues from Devon accounted for 5.4% of our revenues.

Gathering and Processing Agreements with Devon

On January 1, 2014, we entered into 10-year gathering and processing agreements with Devon to provide 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, to our gathering and processing systems in the Barnett, Cana-Woodford, and Arkoma-Woodford Shales.

These agreements provide us 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 our 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. 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. Devon is entitled to firm service, meaning that if capacity on a system is curtailed or reduced, or capacity is otherwise insufficient, we 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 we are paid a specified fee per MMbtu for natural gas gathered on our 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.

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 had an MVC that remained in place during each calendar quarter for four years and has 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 of our combined revenues from January 1, 2018 to July 18, 2018.

Other Commercial Relationships with Devon

As noted above, we continue to maintain a customer relationship with Devon 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 comprised $66.6 million of our combined revenue from January 1, 2018 to July 18, 2018.

VEX Transportation Agreement

In connection with our acquisition of the VEX assets from Devon, we were party to a five-year transportation services agreement with Devon pursuant to which we provided transportation services to Devon on the VEX pipeline. This agreement included a five-year MVC with Devon. The MVC was executed in June 2014 and expired June 2019. This agreement accounted for approximately $3.5 million of service revenues from January 1, 2018 to July 18, 2018.

Acacia Transportation Agreement

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 North Texas. This agreement accounted for approximately $4.9 million of our combined revenues from January 1, 2018 to July 18, 2018.

(e)Tax Sharing Agreement

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, we incurred approximately $0.4 million in taxes that are subject to the tax sharing agreement. Effective July 18, 2018, ENLK, ENLC, and Devon signed a supplemental agreement reaffirming terms of the tax sharing agreement for tax periods ending July 18, 2018 and prior.

Management believes the foregoing transactions with related parties were executed on terms that are fair and reasonable to us. The amounts related to related party transactions are specified in the accompanying consolidated financial statements.