Boardwalk Pipeline Partners Earnings Call Insights: Customer Feedback and Capital Investment

Boardwalk Pipeline Partners (NYSE:BWP) recently reported its first quarter earnings and discussed the following topics in its earnings conference call.

Customer Feedback

Sharon Lui – Wells Fargo: Just in regards to the Bluegrass project, maybe if you can comment on the feedback you’ve been getting from customers and when you think you would be able to complete all the stuff that you talked about.

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Stanley C. Horton – President and CEO: The feedback from the customers has been positive, both into the pipe in the producing area and in the Louisiana for those customers that would be using the project. So, that is, as again said, very positive. So far as completing everything, I mean, this is a multi-year project to get it in service. So, right now we are anticipating that trying to complete the agreement with Williams and gain Board approval, and hopefully we can have that done in a couple of months.

Sharon Lui – Wells Fargo: And in terms of, I guess, coming up with the cost assessment, do you have a preliminary cost in mind right now?

Stanley C. Horton – President and CEO: As I said, we are working through the project with Williams; we are working on the scope, we are working on the cost estimates, we are working on budgets, and we’re just not at a positive right now to release that kind of information. Once the agreements with William are finalized and this project has been approved by both companies, that type of information can be released…

Sharon Lui – Wells Fargo: Would you be, I guess, seeking approval from FERC to convert part of your pipe to NGL service, when does that process need to begin?

Stanley C. Horton – President and CEO: We expect to file the abandonment application on Texas gas with the Federal Energy Regulatory Commission as soon as the agreements with Williams are finalized and executed.

 

Capital Investment

Mark Reichman – Simmons & Company International: Just several questions. First, do you have any change in expectations regarding contract renewals in 2013 or is it still pretty consistent with what you conveyed in the fourth quarter call?

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Stanley C. Horton – President and CEO: I think it’s pretty consistent with what we conveyed in the fourth quarter call. There have been no surprises either way.

Mark Reichman – Simmons & Company International: Then on your growth projects including the Gulf South, Southeast market expansion, the power generation projects in the salt cavern expansion, has there been any change to capital investment requirements or expected in service states?

Stanley C. Horton – President and CEO: No. The only one that’s relatively minor, as I said we did add 100 million cubic feet a day to our Southeast market expansion project and I think the capital cost there just went up a couple of million dollars to be handle that incremental load. But it’s still within the 300 million that we have previously announced. So everything is very, very consistent with what we’ve previously talked about.

Mark Reichman – Simmons & Company International: Then maintenance capital came in a little less than what I was anticipating at $8 million. I think in the past you were kind of projecting $95 million for full year 2013. Is that still a good number?

Jamie L. Buskill – CFO, SVP and Treasurer: Yes, Mark, we’re still looking at around $95 million to $100 million mark for the year.

Mark Reichman – Simmons & Company International: Then just lastly back on the proposed Bluegrass Pipeline, with regard to your negotiations with Williams, I understand that you had mentioned that your – one of the requirements is to get sufficient customer contracts, but what specifically is needed to move it from a letter of intent to a definitive agreement just between you and Williams?

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Stanley C. Horton – President and CEO: Just a finalization of those documents between the two parties, continuing to make sure that we are both in agreement on the scope and on the various documents. When you form these agreements, there is a myriad of things to do operating agreements, capital agreements, I mean it’s not just one 120 page agreement that has been to done and we’re working through those right now. So scope, capital cost, JV agreements, LLC agreements, construction agreements, operating agreements, et cetera, are all in the process of being negotiated.

A Closer Look: Boardwalk Pipeline Partners Earnings Cheat Sheet>>